The FTSE 100 index has recently rebounded and is approaching a critical resistance level around 8400 points.
This level is significant as it aligns with several technical indicators, including the October high, which has previously been tested and rejected. The index is also encountering a bearish oblique line that forms the upper boundary of a consolidation triangle, indicating investor indecision and a compression of volatility.
The next few days are crucial, as a confirmed breakout above this resistance could signal a new bullish phase, similar to what was observed at the end of 2023. If this happens, investors may target the 9000-point threshold, representing a potential 7% appreciation.
The performance of the FTSE 100 is closely tied to global economic sentiment, with positive data from Europe and China potentially boosting equity markets. Central bank policies and geopolitical factors also play a role in shaping the economic landscape.
However, there are potential risks in the technical analysis, and a failure to break above the 8400-point resistance could lead to a negative signal and a possible correction phase. Investors should be prepared for fluctuations and consider entry points above 8400 points, with a target set at 9000 points and a stop-loss at 8200 points.
The interplay of technical indicators and economic sentiment will be crucial in determining the FTSE 100's trajectory in the coming weeks.