Footsie Fortunes
IN LAST week's column, we talked about the recent reduction in volatility and an anticipated break-out from a wedge pattern that had been forming over the last three weeks.
Well, the break-out came the following day (Thursday), and then again on Friday.
Incredibly, the last time we had a daily range of over 100 points in the Footsie was on 19 May 2003, when the index ranged some 116 points. On Thursday of last week, the index also ranged 116 points.
The identical ranges are of no real technical significance; but if you are one who 'buys on a full moon', then maybe you can read something into it.
So volatility has returned to the market, for the time being, although it is unlikely there will be any great surprises from the Budget.
The index at 4425 is perched on a line of support, which, if breached, should see the market down to the next support level at 4390 and then 4335.
A close below this 4335 area, could potentially spell the end of the up-trend, which has been in force since May of last year. If we hold the 4425 level then we can expect a healthy rally up to the 4560-4570 area before meeting any real resistance.
Footsie Fortunes is written by Simon Brown of Quantigma, a firm specialising in charting tools. For more, go to www.quanitgma.net
