UK FTSE 100 Technical analysis prediction 2012

UK FTSE 100 Technical analysis prediction 2012 ; In the UK, the FTSE 100 opened the year at 5899 and spent seven months trading sideways. We saw the range from a high of 6105 to the low of 5591 take place between January until August.

Then suddenly the FTSE broke below the March 5591 low in a violent move lower to witness a larger degree decline not seen since September 2008. The market had a positive rebound in October but was unable to make any meaningful headway to higher highs.

Trading in range bound markets can prove to be difficult as price action tends to become choppy. The UK FTSE 100 demonstrated this for several months. If 2012 starts the year with the indices still stuck in a congestion mode, this is likely to create a case for an explosive breakout. It would be important to keep a close watch on the weekly charts for key reversals as chart patterns can often provide early warning signals in advance.


The FTSE 100, since the October lows of 4868, has seen an attempt to reach towards the 6000 level. Along the way the index has struggled with the 5445 – 5600 level. January should provide traders with some directional bias once the FTSE has managed to break out of its consolidation phase. For a bullish scenario the index will need to clear above 5600 to reach its technical resistance level above at 5820. Once this has been achieved the doors could open for the 6000 -6450 level.

For the bears they will require a thrust lower below 5092 to aim for 4781, which has held the index up so far. If we see the bearish factors accelerate next year the index could potentially see 4469 followed by 4025 become a reality. The market really needs to see a healthy dose of bullish sentiment to avoid the negative play. The FTSE 100 does sport a potential Reverse Head & Shoulder pattern. The index must clear the 5820 level to support this idea and may take the FTSE towards 6450 as the upside target. The 5820 level once reached could be an important line in the sand for the bulls. (source ; http://www.cityindex.co.uk )

FTSE 100 Futures 2012 Technical Outlook
When we look at the monthly chart for the index from a pure classical point of view, we will find three connections that started at the former low of 3440.00 which was recorded in March 2009.

Adding a trend line by angle to this graph would be able to give us a 33 degree angle and that is more than required to define a trend line, or in other words, more than typical for a trend in both cases, up and down.

Having a deeper look at our captured medium term uptrend reveals that it was a correctional trend line not a major one since the movements have been limited at 6090.00 zones where 76.4% Fibonacci retracement of the entire downside rally from 6800.00 -recorded in October 2007- to 3440.00.

TActually, the breakout below the aforementioned trend line could be an indication that the correction might have been limited earlier with touching 76.4% level and this will be our first classical technical catalyst that argues us to suggest potential bearishness during 2012 to resume the major downside trend that started at 6800.00.

The second motive is consecutive four closings below 5525.00 zones which represent 61.8% Fibonacci of the downside wave from 6800.00 to 3440.00.

Let us now move to the Fibonacci levels that dominate the correction for the upside move from 3440.00 to 6090.00 where we can notice that FTSE is presently struggling below 23.6% Fibonacci of this upside wave after touching 50% earlier and we have our technical reasons that encourage us to say that the index will attempt to retest 50% Fibonacci level once more on its way to reach at least 61.8% at 4450.00 as a primitive technical target as follows:

• Ribbons lines –EMA 10 to 80- are currently covering the movements.
• AROON as a representative for trend indicators reflects a bearish case; noting that it is a monthly chart not a weekly or daily chart; thus, the sign is classified as a strong one.
• RSI 14 -momentum- started to show bearish tendency via stabilizing below the level of 50.00, while showing southern tendency.

Moving to the weekly basis will show you that a huge bearish classical reliable pattern is underway where we believe that the index is presently forming its right shoulder.

Of course, the formation isn’t a complete pattern until the value of the index penetrates the confirmation line or rather the neckline at 4760.00 zones. But, we also have our technical reasons that may assist the index to retest the suggested neckline areas since SMA 100 continues pressuring it negatively; whilst RSI 14 has its own resistance line as seen on the provided weekly graph.

The technical obstacle that may slow the bearish actions during the coming period resides at 5070.00 zones where former support zones have been drawn during the past three years. Breaching through 5070.00 will weaken 4760.00 zones and will trigger a panic sell-off towards 4075.00 where our major technical objective resides; noting that a break below 4075.00 will threaten the significant low of 3440.00 .

To conclude, the bearishness is in favor during 2012 as we classify the upside move from 3440.00 to 6090.00 as a correction not as major trend but on the other hand, a breakout above 6090.00 will damage the bearish classical pattern and will open the door towards 6800.00 again. ( source http://www.ecpulse.com/panorama-2012/en/Technical/FTSE.htm )

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