FTSE technical analysis overview courtesy of cantor index

1 mins. to read
FTSE Daily

In the past couple of weeks the FTSE had posted some minor profit taking. However the price action in recent days has lifted the index back to fresh multi year highs and the index has maintained the near term bullish trend, black line.

The RSI over this period has posted bearish divergence, as higher highs in price are not matched with higher highs in RSI, upper red lines. What is interesting however is that since then it has posted an RSI Positive Reversal, Gold line. Positive Reversals often occur after bearish divergence, as in this case, but rather than confirming the negative outlook of the bearish divergence it actually signals significant buying pressure.

The underlying logic is quite simple, essentially it highlights that RSI in the past few days has posted a lower low. This has followed the RSI Bearish Divergence, so we would fully ‘expect’ the FTSE 100 also to have posted a lower low in price. It has not as it has posted the bullish trading range, red channel. This is positive divergence. The fact that this has occurred at the RSI 50 level also helps the bulls believe that the underlying buying trend remains in tact, and that once the near term nervousness has passed the FTSE 100 has higher to go.

In the past few days the FTSE has again pushed onto fresh multi year highs. The S&P looks set to match the Dow and post record all time highs of its own.

So in summary the FTSE has posted some sharp moves higher from November, and seems to have moved into some natural consolidation areas, but has just cleared these to the upside. The near term trend remains in place and while the 50 level holds on the RSI, and strong price trend line support holds the outlook remains skewed to the upside, black line. The price action would need to break the November trend line to negate this positive stance.

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