FTSE 100 Trade Plan: Scenarios to Consider
Earlier this month, we discussed subtle cues indicating the FTSE 100's readiness to break out. Fast forward three weeks, and the index has decisively broken free from its long-term range, surging over 150 points post the US Federal Reserve's reaffirmation of its rate-cut plans.
FTSE 100 Daily Candle Chart
Past performance is not a reliable indicator of future results
Where Next for the FTSE?
To gain perspective post-breakout, let's zoom out to the weekly candle chart. Here, we can see that the FTSE just broken through the May 2018 highs – an area that was briefly surpassed in February last year which printed a new all-time high for the index.
FTSE 100 Weekly Candle Chart
Past performance is not a reliable indicator of future results
FTSE 100 Trade Plan: Scenarios to Consider
Scenario 1: Swift Retest of All-Time Highs
If last week's bullish momentum continues, the market may head directly towards the February 2023 all-time highs. This could present short-term buying opportunities but could also lead to overbought conditions, offering potential for swing traders to sell on a retest.
Scenario 2: Sideways Consolidation
Alternatively, if the FTSE consolidates near highs for several sessions, chances of sustaining a breakout increase. Here, swing traders could position within the consolidation pattern.
Scenario 3: Deep Pullback
Should the FTSE quickly retract last week's gains, a break below Friday's lows might prompt a swift retest of the broken trading range's top, likely offering support moving forward.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
FTSE 100 Daily Candle Chart
Past performance is not a reliable indicator of future results
Where Next for the FTSE?
To gain perspective post-breakout, let's zoom out to the weekly candle chart. Here, we can see that the FTSE just broken through the May 2018 highs – an area that was briefly surpassed in February last year which printed a new all-time high for the index.
FTSE 100 Weekly Candle Chart
Past performance is not a reliable indicator of future results
FTSE 100 Trade Plan: Scenarios to Consider
Scenario 1: Swift Retest of All-Time Highs
If last week's bullish momentum continues, the market may head directly towards the February 2023 all-time highs. This could present short-term buying opportunities but could also lead to overbought conditions, offering potential for swing traders to sell on a retest.
Scenario 2: Sideways Consolidation
Alternatively, if the FTSE consolidates near highs for several sessions, chances of sustaining a breakout increase. Here, swing traders could position within the consolidation pattern.
Scenario 3: Deep Pullback
Should the FTSE quickly retract last week's gains, a break below Friday's lows might prompt a swift retest of the broken trading range's top, likely offering support moving forward.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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