FTSE surged above daily cloud top (7291) on Wednesday after Tuesday’s action showed strong hesitation here on stronger pound. Fresh strength emerged after sterling repeatedly failed to clear psychological barrier and subsequent weakness. The index price hit fresh one-month high at 7333 so far and is looking for test of 7346 (11 Apr high) for full retracement of 7346/7032 downleg which may trigger fresh extension higher. The price is currently riding on the third wave of five-wave cycle from 7032, which eyes its 100% Fibo expansion at 7358 and may travel to 7408 (FE 123.6%) on sustained break. Meantime, the price may correct recent rally (bull-leg from 7143, 28 Apr trough), as slow stochastic is overbought on daily chart. Broken daily cloud top at 7291 now acts as good support, guarding 7264 (55SMA) and lower pivot at 7234 (daily cloud base) loss of which will be bearish. Tomorrow’s releases from BoE are closely watched for stronger signals.
Res: 7333; 7346; 7358; 7374
Sup: 7307; 7291; 7273; 7264
