The FTSE 100 continues it’s relentless run up towards our thick red line. Question is – what will it do when (or if) it gets there? The short term trend is up on this stock market but the long term is down and the ultra long term trend is sideways (and we are at the top of this trend). This means, if we go short, then we must manage risk and reward carefully.
Our target entry zone is very large at the moment at 125 points. If you entered at the bottom of the zone then you would be looking for a 625 point fall in the FTSE 100 at a decent reward ratio. In our view that would be too risky as we don’t see the FTSE 100 getting there any time soon. In fact we are looking at a long entry around 7000 early next year – but that all depends on how the FTSE reacts to our thick red line.
Over the coming days we would expect some pull back at our unconfirmed trend line. This is current around 7416.
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