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The FTSE 100 has pulled back 1.7% from fresh multi-month highs of 7530, its best since early October. Declines, however, were stemmed Thursday/Friday by shallow April rising support at 7400.
This offers potential for the index to bottom out further next week. Perhaps until it tests the post-Christmas rising support trendline itself at 7385. That said, it may also need to test the late March breakout at 7365 for support.
We must thus prepare for a rebound to confirm a new narrower 7400-7550 channel. On the flip-side, should this week’s pullback extend itself below 7400, watch out for the possibility of a pullback to 7365. Any lower and we could be headed for 7300.
Bulls require a break above 7440 to increase the chance of a genuine rebound. Bears require a breach of 7400 to put April support at risk.
Our watch levels: Bullish 7440, Bearish 7400
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