FTSE Coils Beneath Key ResistanceThe FTSE 100 finds itself at a crossroads. After an impressive V-shaped recovery from the April lows, the index has spent the past two weeks compressing beneath a well-established resistance zone. Tension is building and we’re left asking the critical question: will this be a great shorting opportunity or the start of a trend leg higher?
Is a Breakout or Fakeout Coming?
What makes this resistance area particularly significant is its origin. These are the same levels that capped the market back in February and March, just before a sharp sell-off triggered by sweeping tariff policies introduced by Donald Trump. That sell-off reset sentiment sharply, and now, with prices having clawed their way back, the FTSE is once again knocking on the door but hesitating.
On the daily chart, the price action has formed a tight sideways range. The 50-day and 200-day moving averages are both marginally rising, but they’re essentially flat, a signal that the market is in pause mode rather than trending. Volume, too, has returned to average levels, offering no strong clues from participation. This isn’t momentum building, it’s pressure tightening. The spring is coiling.
Zooming into the hourly chart reveals more detail… The FTSE is forming a wedge or price funnel, with swing highs gradually dropping while swing lows climb. This narrowing formation reflects indecision on both sides and underlines just how tightly wound this market has become.
Breakouts from these types of patterns can be significant, but they can also be deceptive. With a major resistance zone in play, traders should be on guard for false moves that lure in breakout chasers only to reverse and trap them. Patience is key. The real tell will be in the confirmation: a decisive daily close beyond the range, accompanied by a surge in volume, could mark the moment when tension finally gives way to trend.
Until then, the FTSE remains in limbo coiling, waiting, and keeping traders on edge.
UK100 Daily Candle Chart
Past performance is not a reliable indicator of future results
UK100 Hourly Candle Chart
Past performance is not a reliable indicator of future results
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