It’s that time of year where we present our FTSE 100 forecast for 2022. This year we have produced only 1 scenario but we must stress this is our “balanced view” and we have also modeled significantly more bullish and more bearish scenarios – we will publish these scenarios if certain criteria are met which we will highlight below.
In the forecast the “gold dotted line” is the potential path of the FTSE 100 for 2022. We have identified 4 possible opportunities for entering a trade.
Opportunity 1
This is a short and we expect to hit this level very soon. Risk needs to be managed very carefully on this position as there is good support under it which gives it potential to go (3) without much of a pull back.
This entry zone is between 7480 and 7580 and is in place early to mid January.
Opportunity 2
This is a long position with significant upside. It should be the best long opportunity of the year (if it gets there). Between 6960 and 7070 will provide the lowest risk opportunities between late January and early February.
It’s worth highlighting that this opportunity is very close to a “scenario invalidation level” – at around 6850 – which makes risk mitigation easier. A significant fall though this level would see our more bearish scenario come into play and the FTSE to potentially fall to below 6200.
Opportunity 3
This is a short opportunity and our current modelling shows that this could be the lowest risk trade of the year. We currently see this level around 7800 in late March. If the FTSE pushes past this level significantly then we will publish a more bullish scenario which potentially shows the FTSE 100 reaching the dizzy heights of 8800.
Opportunity 4
Looking out to the summer there could be another opportunity to go long at around 6950. This is obviously a long way out – literally anything could happen before then to invalidate this position.
By the time we get to the end of the year it looks like the FTSE will end up slightly lower then where it ended 2021 – so not a great year for investments in general but certainly not unusual considering what has happened over the last 2 years.
So there we have it – our first stab at the FTSE 100 for 2022. Don’t take it is gospel – use it as a “possible” road map.
Manage risk and have a wonderful 2022.
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