FTSE Forecast October 9, 2014, Technical Analysis

The FTSE fell initially during the course of the day on Wednesday, but found enough support below to turn things back around and form a nice-looking hammer. With the Bank of England and its Interest Rate Decision coming out today, it is very likely that we will see some type of reaction in the FTSE. Because of this, we feel that a move above the top of the hammer, which is extensively a break above 6500, is a buying opportunity going forward, and perhaps should send the market to the 6600 level.

In the shape of the hammer is essentially perfect, so because that we feel that the market should continue to go higher as the buyers obviously have an interest down here. If we can get above 6600, it’s very likely that this market will then head to 6700, and if we get some type of super dovish statement out of the Bank of England tomorrow, the market could insert to go higher based upon the idea of lower interest rates coming out of London. Even if it doesn’t look like the Bank of England is going to cut rates, it could very well react on the idea that the central bank is further away from tightening than once anticipated.

All things being equal, this area down here is close to the bottom of the larger consolidation area, which extends all the way up to the 6900 level, so if we do get a break higher, it could in fact be a very nice buying opportunity for a fairly significant move. Because of that, we are definitely watching this market as we recognize it could be where all the action is.

If we did somehow break below the bottom of the hammer though, we would more than likely test the 6400 support level, which is fairly significant as far as we can tell. A break below there could potentially send this market down to the 6000 level and into a little bit of a tailspin. That being said though, we think that there are enough buyers down here that this market should eventually lift.