FTSE continues to strengthen, with the bounce from the 6676.56 monthly low of 4 November posting new highs above the psychological 7200 level at 7211.96.
Continuation to the 7236.25 projection is highlighted, but further gains are expected to prove progressively more difficult to maintain, as studies begin to mature. In the coming weeks, profit-taking risks are highlighted, but improving background studies should limit downside tests, as investors maintain a buy-into-weakness strategy.
Support is at congestion around 7000 with any break turning investors cautious once again as subsequent focus turns to the 6875.40 low of 12 December. Further slippage below 6800 will add further weight to sentiment as critical support at 6655/75 then comes into view.
It feels a bit strange and perhaps even a bit bubbly. I'm wondering if the last of the investors are jumping on board, and then the hedge funds and banks will sell.
The background structure is improving - in fact Dax and Eurostoxx50 are showing some structural improvement in the longer term charts - so any pullback could be seen as buy-into-dips strategy.
The question investors will be asking is - should I go long here? My answer would be no. Risk/reward is turning lower, but that doesn't preclude a last pop higher.