This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
The UK Index looks in the midst of repeating its bullish mid-April move. Clients are excited at the prospect of a rally back to 2016 highs. Technicals played a key role this week, allowing traders to identify ranges and patterns and piggy-back profitable moves. What pattern have we spied for you to trade next week?
It’s called a triple-bottom. Amusing I know, but no joke. It involves the price of an asset (equity, index, currency or commodity) trading in a sideways range, bouncing off the floor three times before breaking through the ceiling to rally north.
With the index respecting 2-month lows of 6050 again this week, delivering a third bounce for May, here is a real possibility that a repeat of what happened end-March to mid-April is in the making – the warm up for a 220pt rally. We are watching for any breach of Tuesday’s 6215 highs as a signal that the index is about to shoot north. It only took a week last time. So being the early bird is key. We are ready and waiting to alert our clients.
And best of all, while we wait we can still trade the current 6060-6220 range. Having already bounced back to 6150 we could easily revisit the ceiling we fell back from just last Tuesday. Who knows, maybe we’ll get another failure at said ceiling before falling back to the floor to bounce once again – another bite at the range-trading cherry. For those of a more bearish persuasion, the technicals can be flipped on their head. Perhaps repeated failures at the ceiling offer the chance that the next break is to the downside, delivering a triple-top back towards the 5850 lows of end February. Something for everyone.
The phrase ‘history repeating’ applies nowhere like it does in the financial markets. Of course, it’s a hard task keeping an eye on things amid the countless other rigours of the day. Will the index break up or down next week? The answer won’t become absolutely clear until the move is already under way. You’ll need a fast hand to catch it. That’s why we’re here – we watch the markets all day every day for our clients and give them the information they need as soon as we’re aware of it and before it hits the mainstream newswires.
Access our research now to get the edge you’ve been looking for. Allow us to be your eyes and ears in the market.
Adam Vettesse, Trader, 20 May
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