That being said, little has changed on the basic front for the FTSE 100 and it might continue higher if opinion is healed from the days ahead. Nonetheless, the technical landscape took an undeniable turn for the worse and the index will need to avoid posting a series of lower lows before a sustained downtrend is created.
To this end, the current swing low around 6,310 might serve as a bellwether for future price action. If broken, the level could open the door to further losses and see that the FTSE 100 take aim in subsequent support only north of 6,200.
Should the restoration in risk appetite continue, the FTSE 100 might experience a flurry of overhead resistance. Initial barriers likely live along the Fibonacci level located at 6,570, followed closely by the descending trendline projection in the January high.
Regions of subsequent resistance could then look at 6,700 and 6,855, succeeded by the emotional 7,000 mark that probably played a part in the reversal in early January. Since the FTSE 100 seems to regain its footing and continue higher, the upper barrier near the 7,000 zone will function as a key technical milestone and, if it fail to stall price again, could serve as the starting point to get a break out rally.
Either way, recent declines might need to be arrested until they can be viewed as mere consolidation rather than the advent of a longer-term downtrend. Avoiding a succession of lower-highs and lower-lows is critical at this point. In the meantime, follow @PeterHanksFX on Twitter for analysis and updates.
