The FTSE has traded in a relatively tight range for a little over a month now, with 6,450 offering upside resistance and 6,250 support below.
That support is under pressure again today and if it is broken, it could point to more significant losses in the coming weeks.
The weekly chart does suggest that the FTSE’s bullish run that saw it reach all-time highs back in April has cooled somewhat and remains in correction.
The index fell almost 20% before bottoming out at the end of August and has since stabilised a little more than 10% from its highs. It failed to break above the 50 fib level – April highs to August lows – in October and the 21-week simple moving average has continued to apply downward pressure.
Offering support below though is the 233-week SMA which makes this quite a significant support, especially with it having been a key level of support and resistance on numerous occasions in the past, most recently four weeks ago.
All this considered, the index does probably look more bearish at this stage, although in the absence of a break one way or another, I would not be confident in that.
Ideally I’d like to see a weekly close below the 233-week SMA but a daily close below 6,250 could be a decent early signal, especially as it was previously a key level of resistance at the end of August and throughout September.
A daily close above 6,450 on the other hand would be quite bullish having been such a strong resistance level since early October and support in July.