It’s that time of the week again so here’s my FTSE 100 analysis and overview of what might happen in the week ahead. The downward move that ended on 11th April at a low of 5576 could be tested in the week ahead. This downward move was has retraced back to around 5820 before falling dramatically on Friday. The fall has a ways to go before breaching the April 11th low but if it does I would expect the fall to continue to around 5400 before finding support. The 20, 50 and 200 day EMAs don’t confirm anything at the moment except that there is no trend in place at the moment.
If we take a look at the weekly version of the FTSE 100 chart we can see that the start of a new down trend could be forming. We hit a new low three weeks ago after four weeks of consecutive falls. Since then we’ve had two weeks of gains retracing some of the previous falls and this week has seen a dramatic fall back to around the closing price of the most recent lowest week. For the down trend to be confirmed on the weekly chart price needs to fall below the most recent low. With the state of the markets at the moment I think we could see this downtrend forming an continuing.
Going back to the daily chart there could be a potential head and shoulders chart pattern forming which can be the sign of a reversal. However with no clear signal either way anything goes from a trade direction stand point. Will a down trend emerge over the coming weeks, well that remains to be seen, and as always anything can and will happen.