The FTSE 100 has been on a hell of a run. Since intraday lows of around 5,500 February 11th 2016, the FTSE has rallied over 37%, recording a number of all-time record highs along the way.
The FTSE 100 has been helped higher by a rally in base metals and a weakening in sterling following the EU referendum.
Unfortunately for stock market bulls, these catalysts are starting to recede and Trump’s latest foray into international relations with North Korea is adding further pressure to share prices.
Having given up over 200 points in less than two days, the FTSE 100 could be set for further falls, but where could it fall to?
Key Support Levels
The first level of support is at 7300. This level formed a double bottom in late June/early July which acted as a base for a leg above 7500.
If this fails, one would eye 7244 and the 200-day moving average. This is also in close proximity to 7250, a key level of support held throughout March and April of this year.
A significant break of 7250-7244 opens up the door to 7100 which we see as the most critical level of support in the near term.
7100 is the 23.60% Fibonacci retracement level of the rally starting February 2016 and acted as a support level in late January and April. A break to the downside here puts the bears in the driving seat.
7000 will offer a psychological level of support but as soon as we see a series of prints starting with a ‘6’ the market could well to take the FTSE down to 6798 and the 38.2% Fibonacci Retracement relatively quickly.
Beyond this, we are looking at 6550 and 6300.