How the FTSE 100 can rally to 7,600

FTSE 100 for the week (FTSE:UKX)

Our Friday outlook was to prove devastatingly accurate, the FTSE 100 bottoming at 7,302.47 while our target was 7,301.78. Pretty close by any standards and, aside from blowing our trumpet, we're taking some assurance from our drop target not actually being worsened.

Even though it was pretty damned close and, again, goes some way to explaining why our two FTSE columns are consistently our "best read" despite never mentioning Bruce Forsyth…

The FTSE closed the week at 7,325 points, needing to better 7,407 currently to exceed the immediate market downtrend and enter a zone where growth to 7,500 points becomes a viable ambition, perhaps even 7,596 points if Viagra is involved.

If triggered, the stop can be around the 7,370 point at its very tightest, though recent swings almost demand it be placed just below the 7,300 level.

Of course, there's always the risk the market will use the recent death of someone who was old to generate some near-term hysterics, though if we shelf our cynical nature the visuals suggest that as the market has once again explored the "holiday floor" of 7,300, it should really bounce.

The fly in the ointment is fairly important as "the computer" has a big picture warning flag at 7,305, this being a level which really should not have been broken. But it was broken, briefly, on Friday!

Near-term movements below 7,300, therefore, suggest 7,185 is possible with secondary, if broken, at 7,020 points. Unfortunately, as with the upward potentials, a 100-point stop is probably the sanest possible.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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