FTSE Forming Reversed Head and Shoulders Pattern

The FTSE100 index strengthened slightly on Friday. It was 0.25 per cent higher during the London session and it traded near 7,045 GBP. Thursday's massive sell-off failed to hit the Footsie and it lost only 0.40 per cent, compared to nearly 2 per cent losses of US stocks.

The index seems to be forming the reversed head and shoulders pattern on the one- and two-hour charts, which is a reversal formation and might send the price higher over the next days. The formation is marked on the chart by the blue rectangles. To confirm this patter, the Footsie should jump above the neckline, which is currently located at around 7,080 GBP. If this happens, the index could rise by around 100 points - which is the potential of this formation - therefore the target for bulls could be near 7,190 GBP.

On the downside, the first stronger support is at 7,025 GBP and then at 7,000 GBP. If the price breaks below these zones, the mentioned head and shoulders formation would be cancelled, and the bearish trend might be renewed.

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