FTSE 100 set for crack at 7,600

FTSE for Friday (FTSE:UKX)

We always joke about our Friday FTSE 100 (UKX) report being world famous, literally due to website visitors from all over the world taking this specific report. Hopefully, accuracy for a near-term punt also has something to do with it!

From the point at which the index closed Thursday (7,556 points), we’re tending to view 7,584 points as presenting a fairly reasonable target. Secondary, if bettered, comes along at 7,606 points.

Unfortunately, the tightest available sane stop looks like 7,509 points, which is a bit wide when viewing the risk/reward for a near term trade. Part of the reason for this width comes from the playground the FTSE is about to enter. Had the index closed just two points higher, we’d be adjusting that secondary upwards, perhaps by 70 points.

Complicating things has been FTSE Futures during the evening of 2nd November. Futures reached a high of 7,570 points, this often indicating the market will probably open up for the day – potentially as high as 7,570.

Our rule of thumb is, should the FTSE spike up at the open, unless this spike is bettered within the first 90 minutes, expect a rewind day.

However, in keeping with a craven need to produce more “rules”, if the index actually opens above 7,570, this will indicate strength beyond near-term influences and, therefore, even if it does rewind, it’ll probably go higher later in the session.

Confused? Try being us while BoE play with interest rate announcements.

As the chart below shows, the FTSE has not yet closed above 7,556 and created a new all-time high. While we harbour a suspicion the index intends further upward movement during November/December, we’d be remiss not covering our arse by viewing drop scenarios.

If 7,509 indeed breaks, weakness toward an initial 7,480 looks about right. Secondary, if broken, comes in at 7,450 points. Should this scenario trigger, stop can be comfortably tight at 7,525 points though, in reality, it’s possible 7,514 will suffice.

Have a good weekend. It certainly feels the FTSE intends to experience a reasonable Friday.

 

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, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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