Will the FTSE continue to rise this week?

FTSE this week (FTSE:UKX)

Given the FTSE 100 closed Friday's session at 7,725, we allowed ourselves a little pat on the back as we've spent a while mentioning that number. As regular readers will know, that's probably a problem! For some reason, "important" numbers tend be important.

As yet, we've not defined a series of formula to justify this phenomena, but once a number keeps being mentioned, invariably a few things happen. Firstly, our target number will be achieved (pat on back time). Second, it should ideally be exceeded as this will imply the market will continue going up. As the excess - so far - has only been three points, let's just say that jury is out.

• How FTSE 100 could attack new high

Thirdly, an initial surge above our "important number" will probably fail with the price again returning to 7,725 points. Without being too dramatic, an "important number" will often become a pivot with the market fluctuating above and below until such time a material change occurs. Last year proved an utter misery (for us) as this "important number" nonsense kept happening, a real nuisance in a year which experienced such a flat trading range.

In plain English, we expect some stutters around the 7,725 level.

As always, we've a bunch of caveats. In the event the FTSE actually manages to close a session above 7,725, we shall regard the index as entering a cycle to an initial 7,860 points. If bettered, our secondary calculates at 7,992 points. Currently we are extremely uncomfortable with both target levels, due to the lack of evidence supporting them. The FTSE only needs break red, currently 7,610, to trash the potentials.

Our suspicion, based on common sense, will be for the market to challenge the 7,800 level before experiencing some fall back, potentially to donk against the red line. Or break it, if our esteemed politicians find something to foul up.

In the event red breaks - 7,610 - we are looking for reversal to 7,530 initially. If broken, our secondary is at 7,370.

Source: interactive investor           Past performance is not a guide to future performance

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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