Footsie Fortunes

THE approaching holiday weekend and lack of market interest have made traders focus almost entirely on data releases. First came the US employment figures (non-farm payroll), and next it‘s the Bank of England interest rate decision tomorrow.

The FTSE-100 rallied strongly last week following the US data announcement, rising to 4471 before settling down to close just a few points off the high at 4465.

This week has seen a consolidating market currently trading just beneath the psychological 4500 level. So what can we expect from now on?

Friday gave the market impetus that may well drive the market higher to test levels seen three weeks ago at 4580. The next upper target is at the major resistance area at 4635 – the top of the 10-month channel.

But what effect will the Bank's interest rate decision have on the market? Well, just about every commentator concurs that UK rates will rise, if not this time then certainly at next month's meeting.

The only delay is being caused by the strength of the pound. With this in mind, it seems difficult to imagine a ?shock‘ announcement, adding credibility to the continued market rise.

This is certainly the popular view, and traders are on balance buyers at current levels. However, genuine shock interest rate news or a ?wake-up‘ to current terrorist implications could undermine the UK‘s large-cap market.

Should the market fail to rally, expect support at 4360, where our major support comes in. In summary we have moved back into the middle of our channel with upward momentum likely to carry us higher.

Footise Fortunes is written by Simon Brown of Quantigma - a firm specialising in tools for technical analysis. It is regulated by the Financial Services Authority. For information about courses in technical analysis, go to www.quantigma.net