FTSE 100 Medium Term Short: Divergence, BB, Missed Pivots
The FTSE 100 is trading near 6950, up more than 1200 points from the post-Brexit low of 5727.
Fundamentally, this is because of the sharp fall in Sterling.
However, technically, the FTSE 100 may be due for a correction.
It has relentlessly traded upwards, however:
1) There is strong resistance to be expected at 7000, a psychological round number.
2) There is divergence on the 4H chart at 6950.
3) The FTSE 100 has traded outside its 800-period BB on the 4H chart for more than 2 weeks.
4) There are multiple missed pivots, monthly and weekly, amidst the FTSE's post-Brexit rally.
This might suggest that we are due for a correction in the medium term, perhaps to the 6700 level.
If Sterling recovers, the correction may extend to 6300. However this is unlikely given a dovish BoE, quantitative easing and the market pricing in further interest rate cuts.
Fundamentally, this is because of the sharp fall in Sterling.
However, technically, the FTSE 100 may be due for a correction.
It has relentlessly traded upwards, however:
1) There is strong resistance to be expected at 7000, a psychological round number.
2) There is divergence on the 4H chart at 6950.
3) The FTSE 100 has traded outside its 800-period BB on the 4H chart for more than 2 weeks.
4) There are multiple missed pivots, monthly and weekly, amidst the FTSE's post-Brexit rally.
This might suggest that we are due for a correction in the medium term, perhaps to the 6700 level.
If Sterling recovers, the correction may extend to 6300. However this is unlikely given a dovish BoE, quantitative easing and the market pricing in further interest rate cuts.
Comment:
The correction to 6700 has almost happened. The next interim target is 6500, but GBP weakness is a risk for FTSE upside in the near term.