What next for the FTSE?
The FTSE100 is at new all time highs this morning, but how much further can it go or is it time to sell up?
We take a look at the technical setup of the market.
In the short-term the FTSE is trading in a neat bullish channel which looks set to continue higher. The top of this channel comes in at around 7470 which may be a cap on the aggressive move we have seen this week. This could be a level for any short-term traders to think about taking profit and awaiting a pullback for re-entry.
The medium term outlook remains bullish and again we can see that the index is trading in a bullish channel. The upper end of the longer term channel comes in at around 7510, which of course will get higher as time moves on. We have not seen much in the way of corrections in recent weeks and months, dips continue to be bought by investors and therefore further upside is expected. We will maintain our bullish stance providing the bullish channel holds as well as the horizontal support at around 7100.
The weekly long-term chart on the FTSE 100 has completed a base formation, or an inverse head and shoulders. This is a powerful reversal pattern which suggests there is significant upside potential in the FTSE over the medium to long-term. The implied upside target from the break of 7100 comes in at 8695! Now this may seem a little far fetched, but we are not suggesting we will see this kind of level any time soon. This is a long-term prediction based on technical analysis and does not take into account any global macro factors that could play out in the coming months.
Overall we see no reason to back against the trends, both existing and those developing. We fully expect to see corrective periods materialise but will remain bullish providing the major support at 7100 continues to underpin prices.