It is the 5770 level area that is the main arbiter of the FTSE’s future direction.
The resistance that the FTSE is experiencing at this level (for the last 4 weeks) is holding it back from an upward march and could, if it is really strong, push the index back down hard – just as it did in April and May this year.
It could cause the index to fall back to the 5400 area. But, even then, provided that the FTSE can stay above 5400 the Uptrend will remain in force as the dominant trend and this would allow it to return and attack 5770 for a third time.
The FTSE 100 -
There remains a very good chance though that the 5770 area resistance will not be strong enough to cause a fast collapse and only be capable of causing a lengthy pause. This could mean that it might soon be overcome and, in which case, the FTSE is likely to rise quite quickly towards the 6060 area and then perhaps on further towards a test of the likely resistance to be found at the 6370 area.
The only way to ‘read’ which is the more likely is to watch the weekly priced chart and see how the FTSE reacts to the 5770 area. If it cannot close above it then the risk of more downside becomes greater; if it succeeds in closing above 5770 for two consecutive weeks then it is on its way higher.
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