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FTSE 100 rejects critical resistance as stock rally eases


FTSE 100 News and Analysis

As discussed in yesterday’s analysisFTSE, DAX and other global indices have recently experienced a strong recovery from the lows of March as the return of risk-on-sent sentiment boosted demand for equities.

After a decline of around 13.3% in the UK 100 index from the February high, a setback of the 6,800 handle allowed bulls to push prices back above the 7,000 mark before falling into a wall of resistance at the key psychological level of 7,500.

Despite increased volatility and unprecedented geopolitical background, the strong rise in British equities allowed the FTSE to recover about 10.8% of those losses, driving prices back to levels last tested before the invasion of Ukraine.

After five consecutive days of profits, the formation of a hang man cherry on the daily time frame (a bullish reversal pattern occurring after a strong upward trend and is an indication of a pause in the upward trend) price action forced back into a confluent zone, just below the 7,500 level mentioned above.

FTSE 100 Daily Chart

Graph prepared by Tammy Da Costa using TradingView

From a shorter-term perspective, the four-hour chart highlights the indecisive price action as shallow bodies remain in a well-defined range.

Meanwhile, the MACD (Moving Average Convergence / Divergence) crossed the zero line, a potential indication that upward pressure may continue to decline in the short term.

FTSE 100 Four o’clockCheart

FTSE 100 rejects critical resistance as stock rally eases

Graph prepared by Tammy Da Costa using TradingView

FTSE levels to watch:

Support:

  • S1: 7425 (20 days MA)
  • S2: 7281 (50 days MA)
  • S3: 7000 (key psychological level)

Resistance:

  • R1: 7500
  • R2: 7687 (High February)
  • R3: 7800

FTSE 100 Market Sentiment

FTSE 100: At the time of writing, retail trader data shows 39.40% of traders are net long with the ratio of traders short to long at 1.54 to 1. The number of traders net-long is 14.86% higher than yesterday and 22.21% lower from last week, while the number of traders net-short is 11.62% lower than yesterday and 32.54% higher than last week.

We usually take a contradictory view of crowd sentiment, and the fact that traders are just short indicates that FTSE 100 prices may continue to rise.

Positioning is less just-short than yesterday, but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed FTSE 100 trading bias.

— Written by Tammy Da Costa, Analyst for techlives.in

Contact and follow Tammy on Twitter: @ Tams707

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