FTSE 100 rallied today, breaking above the key resistance (now turned into support) zone of 7345, which prevented the price from moving higher from October 24th until 31st. Overall, the price structure is of higher peaks and higher troughs above the upside support line taken from low of October 3rd, and thus, we would consider the short-term outlook to be positive for now.
If the bulls are strong enough to stay in the driver’s seat and push the index above the 7400 zone, we may see them pushing towards the highs of September 27th and 30th, at around 7442. If they are not willing to abandon the field and manage to drive the price even higher, then they could aim for the 7471 area, which is defined as a resistance by the inside swing low of August 1st.
Looking at our short-term oscillators, we see that the RSI edged north and just poked its nose above the 70 mark, while the MACD lies above both its zero and trigger lines, pointing up. Both indicators reveal positive momentum and support the case for FTSE to continue drifting higher for a while more.
On the downside, we would like to see a clear dip below 7240 before we start examining the bearish case. The price would be already below the aforementioned upside line, while the dip below 7240 would confirm a forthcoming lower low. The bears could then target the low of October 23rd, at 7185, the break of which may allow the decline to extend towards the low of the day before, at 7145.
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