FTSE Technical Highlights:
- FTSE working towards the apex of a wedge formation
- Levels to watch on both sides of the wedge in event of a breakout
FTSE working towards the apex of a wedge formation
The FTSE is remaining relatively tame compared to Sterling as ‘Brexit’ headlines continue to hit the tape. The 1-month correlation between the FTSE and GBPUSD is a solid -61%, however, the short-term 1-week has flipped to +55%, so the relationship has changed a bit. Nevertheless, big swings in FX aren’t showing much meaning to the often currency sensitive FTSE.
From a pure technical standpoint, price action continues to work its way towards the apex of a descending wedge. It may or not make for a tight pattern, but if it does it would be the best scenario from where I sit, as pent up pressure would be set to release into a strong move.
There is good opposition on both sides of a break whether it comes from the apex of a wedge or begins now. On the top-side there is confluence between price resistance (~7260) and the 200-day MA. On the down-side the bottom of the developing wedge is in alignment with the channel line off the December low.
For now, trading is difficult with the FTSE stuck amidst choppy price action, but with a little more time that could change.
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FTSE Daily Chart (Wedging, levels above and below)
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—Written by Paul Robinson, Market Analyst
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