On the Daily graph we have kept the near term trading range, red region. We can see how the market has stayed strong through July-August. Of technical importance is how the moves higher on this move have posted fresh highs for the summer. This is important as we had previously flagged up some concerns on how the index had failed to create a higher high following the sell-off in mid July. So this does indicate decent near term buying, despite the traditionally light summer volumes.
The Eurozone issues as ever linger on, but the levels broken in recent weeks do suggest that the longer term buyers are increasingly looking through the eurozone news.
The index does look vulnerable to some profit taking, but within the existing strong near term trend support would be expected to hold any such selling from accelerating into anything more serious.
In summary then the FTSE has continued to post a solid H2 recovery. Significant resistance levels have been breached and the index is in a strong near term bullish trend. Leaving an optimistic view for the remainder of Q3. There is room for profit taking that could allow for weakness to pull the index down towards 5,650, but within the brightening outlook any such profit taking would likely be seen by the more medium term buyers as attractive areas to add to existing positions. Moves under the current trading range would be needed to negate this brightening outlook.