In our forecast of FTSE 100 for October 2020, we pointed out a support in the level of 5560. It tested twice and even broke it slightly in intraday trading to go back above it. Now, on November 2, it is around 5645, and we are going to give you our views. We hope it helps, but remember that our analysis can be very wrong and should never be taken as advice of any type.
The truth is things do not look well right now. There are several important sectors such as Telecoms and oil-related companies suffering negative trends and breaking supports. Banks in Europe are also in a weak position. And although indexes are managing no to fall too much, right now the subjective feeling of the author of this post is that they eventually will experience a down lag to at least go close to March troughs.
However, subjective opinions are not worth very much in the stock market, so let’s see more objective levels anyone should check.
Supports
We are close to an important support which is the same as we gave for October. It is important that we do not have a weekly close under the 5560 level (always keep in mind that supports are more of a range of prices than an exact point).
If the FTSE 100 loses that level, the next important support is between 5200 and 4898, which is the trough the index did on March of this year.
Resistances
The price seems to be accumulating around 5800 and 5900, and this is the first resistance we see. Surpassing it could mean that it wants to test the 6485 level. However, there are big barriers to do it because the index has been doing decreasing tops that now have become resistances:
- 6288 last time in August
- 6110 in September
- 6020 in November
And you may be thinking, well, if you say all the numbers in the list, of course one of them is going to work as a resistance. You are right, but technical analysis is not a magic wand. It tells what it tells, and we cannot know in which of them the price is going to stop.
What is really relevant about knowing these resistances is not each point to know where the price is going to stop, but knowing that there are so many resistances near the actual price that a bullish position is very risky and seems to have little chance of succeeding.
The forecast
Our forecast is a sideways movement between 5560 and 5900. But if it breaks the sideways, we would bet on the down side.