FTSE futures (UK100) closed lower yesterday after rallying to their highest level of the month in early trade and in doing so printed a shooting star on a daily chart. Yesterday’s high of 6315 now becomes an important reference point in terms of swing levels and if the market failures to breach and close above here in the coming days then bears may feel this is another opportunity to attempt to position themselves in what is a seasonally weak time for the index.
Since making all-time highs last April the market has made a succession of lower lows and lower highs, in doing so fulfilling a simple definition of a downtrend. The high towards the end of last year at 6445 was respected on another surge this April with the market topping at around 6380. Unless we see price break above this level then the trend remains intact and a move lower is the base case scenario. The first swing level to keep an eye on with regards to support is approximately 6175.
The rise so far this month is quite surprising considering that a referendum on the UK’s EU membership is scheduled to take place in just over a fortnights time and recent polls have suggested the outcome is still far from certain. If anything recent surveys have shown a swing in popularity towards a Brexit, and whilst this may not have as greater long-term negative economic impact as the doom mongers would have you believe it is highly likely to cause elevated levels of uncertainty which is a phenomenon that has historically weighed on stock markets.
Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.