FTSE finds buyers at key support level
FTSE 100 Index (FTSE) Technical Analysis Report for Aug 07, 2020 | by Techniquant Editorial Team
FTSE ended the week 2.28% higher at 6032.18 after edging higher £5.28 (0.09%) today. Trading up to £30.21 lower after the open, FTSE 100 managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (FTSE as at Aug 07, 2020):
Friday's trading range has been £49.29 (0.82%), that's below the last trading month's daily average range of £93.24. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for FTSE.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving lower in the previous session, the stock index managed to close higher but below the prior day's open, forming a bullish Harami Candle. Additionally, one bullish candlestick pattern matches today's price action, the Bullish Spinning Top. The last time a Bullish Spinning Top showed up on July 29th, FTSE actually lost -2.31% on the following trading day.
After trading down to 5996.73 earlier during the day, the index bounced off the key technical support level at 6013.00 (S1). The failure to close below the support might increase that levels significance as support going forward.
Though still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Buying could speed up should prices move above the close-by swing high at 6111.50 where further buy stops might get activated. Selling could accelerate should prices move below the nearby swing low at 5980.40 where further sell stops might get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. Its common bullish interpretation has been confirmed for FTSE 100. Out of 110 times, FTSE closed higher 58.18% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 59.09% with an average market move of 0.43%.
With five out of the other five Major European Indices closing higher today, the ones that stand out on the positive side are TECDAX gaining 1.97% and BEL20 closing 0.95% higher. None of the markets ended the day in the red. Read more