FTSE forecast for the week of August 31, 2015, Technical Analysis

The FTSE initially fell significantly during the sessions that constituted the previous week, but as you can see we found some type of support near the 5800 level that has been extraordinary. After all, the market looks as if it has found an extreme amount of support as we closed out the week at the 6247 level. This is a massive move lower, followed by a massive move higher. In other words, there had to be real conviction in order to move this market in both directions. The selloff was brutal as we saw wealth destruction around the world. Ultimately, we believe that this market will continue to find buyers every time we pullback, because quite frankly the size of this candle is very impressive. If we can break above the top of the candle, we feel that the market should continue to go much higher, probably heading towards the 6800 level.

Ultimately, there is no way to sell this market as we have seen so much in the way of resiliency. Stock markets around the world rebounded significantly, and as a result we think that the FTSE should continue that trend as well. The FTSE was probably oversold in reaction to various problems in Europe and the United States and less so in the United Kingdom. With this, it’s probably only a matter time before normalcy brings comfort back in owning British stocks.

The British pound has sold off recently though, so that of course means that people will look at British stocks as a value as exports become cheaper. With this, the market should continue to find buyers every time we pullback and that’s exactly how we are going to take advantage of value as there should be interest every time we dipped. We also look to short-term charts in order to enter what we see as the “big picture” on the weekly chart. Ultimately, the market is almost impossible to sell because of the buying opportunity and pressure that we have seen over the last several sessions.