Daily FTSE Technical Update

By ForexMansion.com

by, James A. Hyerczyk

Volatile trading conditions once again dominated the FTSE 100 market. Traders seemed uncertain about the market's direction over the near-term. The sideways action on the 240-minute chart is clearly forming a non-trending triangle chart pattern that suggests the market is setting up for an impending breakout. At this time the direction is unclear, but a breakout over the last swing top at 5314.30 is likely to trigger an acceleration to the upside while a break though the last swing bottom at 4928.10 is likely to signal a sharp decline.

The first sign of strength to the upside will be a penetration of a top at 5250.18. Once this area is broken, the FTSE must form support at this price to create a strong base to drive the market higher. In addition, traders must be willing to buy strength or the rally will fail. This has been the key element absence from the market. If traders are unwilling to buy strength at some point, the rallies will continue to become set-ups for the short-sellers.

Because of the series of lower-tops and lower-bottoms on the larger time period charts, there is a strong bias to the downside. Currently, the shorter-term charts are also beginning to show this same trend developing. Recently tops were made at 5406.10 and 5314.30. Bottoms were formed at 5059.20 and 4928.10.  Based on the short-term range of 5314.30 to 5160.80, the market is attempting to form a new lower top inside the retracement zone at 5237.55 to 5255.66. If traders succeed in forming a new top in this zone, then look for the start of another move to the downside.