The FTSE 100 index has recovered from the minimum done at the end of March, but it does not seem to be able to go back to the pre-Covid levels. Let’s take a look at it in detail and see what important levels we can check.
30-week moving average
From the Covid-crash until now, the index has only been able to surpass its 30-week moving average incidentally to fall back below it, and this is a very bad indicator. Actually, in the last weeks we are seeing how this average is working as a resistance, and the bad news is the average has a negative slope. Thus, this is our first level to check; and if it is not able to surpass it clearly with a weekly close above it included, we would not dare to think about new important rises.
Other resistances
After surpassing the moving average, we find another resistance at the 6370 – 6460 level. At this level we had a gap (that was closed) between the week of March 2 and the week of March 9. Also, it was the level in which the price stopped in June during the rebound after the Covid-crash.
In case these levels are surpassed, we would need to review this analysis; but at this very moment, it seems unlikely for the short term.
Supports
When this article was written (October 12), the FTSE 100 was at 6000, and the first support is quite close at 5740 or better, if we use a range between that price and 5560.
At 5740 we find the minimums of the August 31 to October 4 period and the 38 percent correction to the rise from the Covid-crash minimum to the top in June. At 5560, we find the 50 percent correction of such rise and the lowest points of the period from April 20 to May 17.
Losing these levels could mean a visit to the lowest levels reached in March of this year.
As you see, we are not analysing fundamental factors such as GBP – USD relationship, Brexit, pandemic consequences, etc. We think that we can find all that information in the chart, and maybe that is why things do not look well now.
The forecast
Right now, it seems that a new bearish movement is more likely than a bullish one; so if a forecast is needed, it is that the FTSE 100 will test the supports on 5560 and maybe break them.
Just remember that this article may be very wrong. It is just an opinion, and it does not pretend to be financial or investment advice. Make your own decisions and ask your investment advisor.
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