FTSE 100 – Watch Out for 7313 Key Level

[MongiIG]

FTSE 100 is correcting and seems to be preparing to get back into the driver seat. Subject to not breaking through 6787 key level.

FTSE 100 is unfolding in a bullish cycle since March 2020 low and gained up to 57% in February 2022. However, price stalled at February 2022 high and is correcting ever since and has down by 11.70% up until March 2022.

LETS TAKE A CLOSER LOOK AT A WEEKLY CHART

Source: TradingView, prepared by Zorrays Junaid

February to March 2022 move is a Wave (4) correction. And it is currently unfolding wave (5) to the upside. Alternatively, if it breaks through the extreme of wave (4) at 6787, FTSE 100 will subsequently return to wave (4). I can expect price to correction further prior to an advance. There is an invalidation at the extreme of wave (1), 6511, that would complete break this bullish sequence. But FTSE 100 is nowhere near that.

We have 200-Period Moving Average below Wave 2 as it supports that we are still in an uptrend.

WHERE ARE WE RIGHT NOW IN WAVE (5)? LETS DROP TIMEFRAMES

Source: TradingView, prepared by Zorrays Junaid

Since March 2022 low, FTSE 100 has formed wave 1 in a 5-wave sequence and currently playing within wave 2 correction. We can determine this wave 2 corrective cycle to complete when it breaks through 7313.70 key level. Another way to spot that these temporary sellers are running out of steam is by looking out for RSI divergence. Wave 2 is supported by a strong bullish divergence. Breaking 7313.70 is our first clue we are advancing into wave 3 to the upside.

Second target confirmation would be to break through February 2022 high at 7687 as per shown on our weekly timeframe.

WHAT TO EXPECT IMMEDIATELY?

The sweet spot would be to identifying a 5-wave sequence through 7313.70 to determine whether wave 3 is underway otherwise until then FTSE 100 is still correcting within wave 2 to the downside.

 

Jun 22, 2022 | DailyFX
Zorrays Junaid