Another month has gone, and here we are with our chart analysis about the index FTSE 100. This month, the financial sector has seen how a piece of digital art created by Beeple has been sold at Christie’s for USD 69,346,250. Crazy times!
In future blog posts, we will explain a little how investing in digital art works, but now we are here to talk about the stock market.
Today, the FTSE 100 has opened with a bullish gap. This is usually a good signal, and we like it because it allows us to have a very clear stop loss that will be the price that would close the mentioned gap. So for any trade, our stop loss in the FTSE 100 would be 6736. Since things are not usually so exact, we will set it at 6727 to allow the price a little margin.
The first objective is also clear, 6874 that was the close of the top around January 8 and 11. When we wrote this article, the price was at 6815. Therefore, trading at this very moment with that objective does not make sense because we find the first resistance less than 1 percent above.
If we look back between February 2019 and February 2020, the FTSE 100 was in a sideways movement with low spots around 7000. We think that could be a good objective for this trade. It would mean a 2.7 percent profit, more than double the 1.3 percent loss that we have between the price now (6815) and the stop loss (6727). Besides, round numbers are always important psychologically, so it makes sense to think that the price will stop at 7000.
We also think that the market is willing to surprise us. It has been rising since the end of October 2020; and now that the world is being more optimistic thanks to the vaccine, it would not surprise us if the market decides to make a correction. Therefore, we will be in the long side while we do not have any insight about trend changes, but always be careful to not risk too much in trades.
*This post was written when the FTSE 100 was at 6815 on April 6 2021.
**Nothing written here is or pretends to be financial advice, but just an opinion with entertainment purposes.