Having written about Support, Resistance and Trading Ranges last week, I thought I’d build on this. So let’s look at two numbers, found in both our pre-market Morning Report publication and updated in our late-morning Index Focus. They are there to help Accendo’s clients identify when the UK’s UK 100 equity Index may be breaking higher or lower and may offer profitable trading opportunities. Some clients devour all our daily research; others are content with merely these two numbers.

Our Bullish and Bearish Watch Levels (a Ronseal name if ever there was one) are there to help clients profit from the potential next move by the index, be that higher or lower. They are suggested levels that you might want to keep an eye on and which, if hit, may mean that change is afoot. At the end of the day the decision is yours where you buy or sell. If we can help along the way, that’s great.

For example, if the UK Index trades 7690, at the top of a week-long 7600-7700 sideways channel, then our bullish watch level might be at 7710 (+20) and our bearish at 7670 (-20). If the index hits the former it could mean it is breaking beyond the 7700 ceiling of the aforementioned range and could rally further. Time to watch and decide whether there is upside to be traded. If the index hits the latter it could mean it is reversing, breaching support and could be headed back towards the 7600 channel floor. Time to watch and decide whether there is downside to be traded.

These watch levels are intentionally set just above resistance and below support. Not too close that you get drawn into predicting a breakout or breakdown that never materialises; not too far away that you are late to the party after a valuable breakout or breakdown. Much like a stop loss, not too tight that you get whipsawed, not too far away that you miss the boat. After all, the aim of the game is profiting from the change in market mentality and new bullish/bearish attitude as soon as the index begins to prove that it is moving from one situation to another.

Importantly, the exercise is not unique to the UK Index . Identifying the next level of resistance/support, opening the door to a fresh up/down move, works just as well on the chart of any share, index, commodity or FX pair. So not only do our levels help you with the UK Index , they also show you how to do it for everything else. Double the help, from just two numbers. How good is that?!

Furthermore, with some UK Index shares and sectors making up a large percentage weight of the Index (Miners 11%, Banks 14%, Energy 11%) when it breaks higher or lower it can be worth checking whether those heavyweight stocks and influential sectors are doing the same. So that’s now triple the help from two simple numbers. How much more do you want?!

Is your current provider offering you such help? If not, you have to ask why? Don’t you deserve it? I’m sure you can see the value in checking just two numbers twice each morning. Even if you don’t read all the other really helpful and informative text in the Morning Report or Index Focus. It’s a few seconds well spent, to set you up for the morning and afternoon trading sessions.

If that’s how our Morning Report helps you start each trading day, and our Index Focus updates you into midday, imagine how good the rest of our research offering is (e.g. Another Level, Trade Alerts). In fact, don’t just imagine, try it for real. Get access to our award-winning research and see for yourself how two numbers can change the way you trade both UK Index and your favourite shares, forever.

 Mike van Dulken, Head of Research, 15 Jun 2018