FTSE Futures May Gain After Consolidation: Technical Analysis

By Francesca Cinelli

Sept. 23 (Bloomberg) -- Futures on the FTSE 100 Index may continue their advance after consolidating near the 5,100 level, according to Commerzbank AG technical analysts who look at price charts to forecast movements.

“The mini-consolidation of the last days around 5,100 has a trend-confirming character to the upside,” a team of analysts including Frankfurt-based Achim Matzke wrote in a report dated yesterday. Futures on the benchmark gauge for U.K. stocks expiring in December have entered an “upside trend channel” with a lower trend line about 4,970, reflecting “the noticeable devaluation of the British pound.”

Even so, Matzke noted that the relative strength index for the futures is in a “short-term overbought technical situation” that “indicates another consolidation day.”

The RSI tracks momentum by comparing closing prices with daily trading ranges over preceding days. When the gauge climbs above 70, technical analysts say the measure is more likely to retreat. The 14-day RSI on FTSE 100 futures expiring in December closed at 74 yesterday.

The FTSE 100 has surged 46 percent since March 3 after earnings from HSBC Holdings Plc to GlaxoSmithKline Plc topped estimates and the Group of 20 nations committed about $12 trillion to revive growth.

To contact the reporters on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net;