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FTSE 100 Could Gain 8.6% on Break to 2019 high at 7698, Brexit

The FTSE 100 is looking very interesting from a technical perspective. The FTSE 100 is trapped between the August low of 7033.8, and the July 31 high of 7698.4. The difference is 664.6 points, and as the range qualifies as a rectangle pattern, it suggests that if the FTSE 100 manages to establish itself above the July 31 high of 7698.4, the index might be able to reach the 8363 levels. Such a move would amount to an 8.6% price change.

In the short-term, the FTSE 100 is trapped within a smaller range, made up of the 7488 to 7698.4 level. As this is also a rectangle pattern, it suggests that the FTSE 100 could rise to 7904.9 on a break to the upper limit of the range at 7698.4. The benefit of the smaller pattern is that it will afford traders to place their stop-loss orders at 7488.3, or just below the breakout point, and thereby generating a better risk-reward ratio.

While the charts today look bullish if the FTSE 100 trades below the January 8 low of 7488, the trend would turn short-term bearish and the price might try to reach the other side of the range at 7033.8.

The most likely trigger to the breakout, would be formal Brexit date on January 31. After that the UK will move into a transition period, until the end of the 2020, as the UK and EU try to figure out the future relationship.

If gold prices were to trade above the October 25 high of $1518.41, then the price might be able to reach the $1563.14 level, as the difference between the upper and lower limit of the pattern is added to the October 25 high. On a break to the October 11 low at $1473.68, the price might be able to reach the $1428.95, as the difference in the range is subtracted from the October 11 low.

Time will tell if bullish or bearish traders will command price as the chart pattern itself is neutral in its outlook.