How FTSE 100 could attack new high

FTSE for this week (FTSE:UKX)

Despite a fair probability of Tuesday pretending it’s Monday and providing an inconsequential start to the week, we’re fairly optimistic as to what the future holds. At least for the near term! Perhaps it’s the good weather, but things appear to want to continue upward.

Our inclination is to suggest 7,585 as a reasonable trigger level for the near term. It appears the FTSE 100 (UKX) now bettering such a point should bring travel toward 7,725 points.

Such has been the pace of recent acceleration, the market needs to slip below 7,515 just to give the first signal of a pending slowdown. Above 7,725 points and we shall start viewing 7,785 points nervously.

The chart below gives ample reason to explain nerves.

At the start of this year, the FTSE manages to close at 7,778 points, this representing an all-time high for London. Should the index once again stumble at such a level, there’s a very real risk of the market deciding “that’s it, not going higher”.

This attitude tends create a self-fulfilling prophecy, perfectly capable of challenging the immediate acceleration trend or, more probably, the post Brexit Vote uptrend (dashed red line on the chart), which currently lurks around 7,050 points.

For now, absolutely nothing suggests this trend is anything other than a line on a chart!

What will happen, should the immediate ‘red’ uptrend be broken?

Probably very little, but closure below red is risky, allowing weakness to 7,410 points initially. If broken, secondary comes along at 7,350.

For now, we’re inclined to optimism.

Source: interactive investor              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.

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