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Article / 13 June 2016 at 14:37 GMT

FTSE 100 desperately hanging on to key levels

Technical Analyst / Saxo Bank

g The countdown to Brexit is ongoing, but
FTSE seems to be following its own path. Photo: iStock

By Kim Cramer-Larsson

The FTSE 100 has outperformed the rest of Europe since the New Year despite UK polls showing that the country could be on the brink of leaving the European Union.

The chart below shows FTSE 100 is down 1.2 % since the New Year whereas Germany's Dax and the Eurostoxx 50 are down 6% and 10 % respectively. 

Is it because EU will be hurt more by a Brexit than UK?

The FTSE 100's outperformance
UK vs EU
Source: SaxoBank

While most European markets have broken all support levels, the FTSE 100 is holding on to its strongest support, at least for now. It is under heavy pressure, however, as 6,050 seems to be the pivot point for FTSE 100 having bounced off it several times since February. 

The formation actually looks like a shoulder-head-shoulder pattern with the horizontal support level mentioned anove as neckline. This support/Neckline is also at around the 0.382 retracement of the February-April bullish market 

At the time of writing this article, RSI is below the 40 threshold line which indicates bearish sentiment.  MACD also indicates bearish sentiment. 

A close below 6,050 will confirm a bearish trend that could send the Index down to at least around 5,850 which is the 0.618 retracement level of the February-April bullish market and also a 0.5 projection of the head-to-neckline difference which is the minimum level a confirmed SHS pattern should reach. 

FTSE 100 daily
Source: SaxoBank

— Edited by Martin O'Rourke

Kim Cramer-Larsson is a technical analyst at Saxo Bank


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