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FTSE Forecast: Consolidates, Eyes Breakout Above 8600

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • During my daily analysis of European indices, the FTSE 100 has caught my attention as it looks like we are still stuck in a massive consolidation area.
  • The 8500 level underneath has been important, and it has proven itself to be supportive as we had seen during the Monday session.
  • Now that we are going back and forth, it looks as if the buyers could very well come back into this picture and try to take advantage of cheap contracts, but ultimately this is an uptrend, and you need to respect that.

FTSE Forecast Today 29/01: Consolidates (graph)

On pullbacks, I think we have a very likely buying opportunity, and I think that extends all the way down to the 8350 level underneath. The 50 Day EMA is racing toward that area, and I think that will continue to be a technical indicator that a lot of people would be paying close attention to. On the other hand, if we were to break above the 8600 level, the market could go to the 10,000 level over the longer term. After all, we have seen the FTSE 100 scream to the upside before going sideways as we have over the last couple of days. I think we are just simply digesting some of the momentum, which is something that you could probably say about most indices.

Technical Analysis

The technical analysis is obviously bullish, and it’s possible that we could see a move to the 9000 level based on the “measured move” of the potential bullish flag that we are forming. Either way, I don’t have any interest in shorting the FTSE 100, and with the British pound weakening the way it has, I think we have a situation where it’s likely that stocks in the United Kingdom may pick up on the idea of exports being cheaper. I don’t know that I like that idea, but ultimately it is a real possibility the traders will start to think along those lines, because quite frankly that’s how they been conditioned to think over the last 15 years or so.

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Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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