FTSE for Friday: is FTSE 100 about to establish new range?
The blue-chip index had parked between 8,100 and 8,300 for two months until a breakout this week. Independent analyst Alistair Strang share his view of what could happen next.
2nd August 2024 07:45
by Alistair Strang from Trends and Targets
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Our pessimistic outlook for the market, in the event of an interest rate cut by the Bank of England, proved not to be a wasted emotion, the FTSE 100 indeed doing the opposite of what was expected.
An upward spike at the open to 8,405 was paid back in full by subsequent reversals to 8,268 and a potential bounce. To be honest, we suspect Friday shall provide some gains for the FTSE, hopefully not with an artificial spike upward in the opening seconds.
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We think there was very real uncertainty about “what to do” in the early hours of Thursday, several companies showing quite different Futures values for various markets. This created a situation where we felt it unwise to provide Short potentials across the FTSE or European markets, while the USA proved impossible to predict with any degree of confidence.
Friday 2 August expects the US to provide their Payrolls numbers at 1.30pm UK time. Given the majority of state's numbers will be guesstimates, due to the proximity to the start of the month, it’s almost inevitable the collated reports shall show more than 175,000 jobs created, this being the estimated number by analysts. Exceeding such a target will cause the markets to spike, the FTSE usually opting to follow along, and we’ve come to expect “estimates” always to be optimistically wrong. When the real numbers are drip fed in the coming week, we expect the markets will experience a series of reversals.
It certainly looks like the FTSE 100 has decided to abandon the previous median level of 8,200 points, probably heading upward to another parking level for the month of August until mid-September, by which time the big players will all have returned from their summer holidays.
As for Friday, the FTSE is showing some quite interesting potentials. If we are correct in our supposition the forced reversal to 8,268 points on Thursday should now be rewarded with some upward travel. Next above 8,321 points should prove capable of a lift to an initial 8,380 points with our secondary, if bettered, calculating at an impressive 8,468.
This creates a montage of higher highs, meaning we shall view a long term 8,604 points as creating an influence. If triggered, the tightest stop looks like a massive 8,230, perhaps confirming an illusion the index is about to be “trapped” in a zone between 8,200 and 8,600 points.
If things intend to go horribly wrong, below 8,268 could be dangerous, presenting the scenario of reversal to an initial 8,209 with our secondary, if broken, at 8,139 points.
Have a good weekend.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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