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FTSE100 - Daily Analysis


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I don't use pivots so can't comment specifically but as you know markets never move in straight lines so I anticipate a retrace of this downward move early on.  Whether that happens today or tomorrow around NFP I can't say.  So far the whole looks like the rally end was reached on 18 March followed up by a W1-2 (all the way to the 88% Fib) and then back down.  Assuming this is a W3 (or a Wc) then another W1-2 before the bigger move down is likely.  Once again I am struck by how eriely similar this pattern playing out is to last November...  For now I am happy with my Short at the W2 turning point yesterday with close stop and will await NFP events before considering another position.  The only thing that would drive me to take another Short would be a decent small W1-2 but I'll be watching the US markets for correlation on that.  We really need the US to give up on their optimism here.

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The FTSE100 is running in similar fashion to all the other markets (bar the US) with an apparent Wave 2 turn being consolidated.  Thee US markets exuberance is propping up all but the Nikkei but I don't see that lasting, in fact I see the US ending with a final flourish, probably today when it opens, before a sustained drop in all stock indices.

 

On my daily chart the price has returned to, and bounced back down off, my down-sloping tram (red), which coincides with a Fib 76% on the Hourly.  There is decent Neg Mom Div on both time frames and over bought Stochastic and RSI (dropped on the Daily and heading down).  The is an additional negative divergence on Stochastic on the Hourly chart.

 

I rarely look at the 15mins chart but on major turns I do to see if there is a 5/3 pattern and here we have a 5 down and 3 up (in prog and near end?).  If the US does indeed turn at the points I highlighted in thge US markets thread then the FTSe could well complete this 3 up (in a final 1-5 pattern) and turn at the Fib 76% off the previous rally (the higher of the 2 yellow lines on the hourly chart).  This ties with a similar apparent target on the Dax.

 

Worth a Short on the FTSE at these levels but I would be waiting to see how the US opens, it could pop and then drop in which case a fast entry on the FTSE could be an excellent trade.  On the US I'd prefer to see the 5/3 before entering.

 

Any alternative views?

 

Charts:

 

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Condor,

 

In the end the US opened as I'd hoped with a small drop, not by any means conclusive yet and US strength (or over optimism if you like...) has been holding the European markets up but is that about to change?  Japan continued a hard move down over night (about 1,400 points in total over the past few days!) and FTSE and Dax look set to follow.  Dax has just put in a new lower low as I write this.

 

Looking at the FTSE the nested EW1-2 pattern looks good after a major turn Dow (18 Mar - Pink 2 label on chart).  We have a series of negative Momentum Divergences at each W2 turn (inc a large one on the Daily chart at Pink 2).  This is set fair for a strong run down in a W3.  My only reservation is the US markets, which should be due to complete a short drop with a strong retrace before a larger drop.

 

For today at least I see bearishness in Europe, followed maybe by a retrace rally when the US opens but once the US achieves a reasonable rally and if this rally runs out of steam without making a higher high then get the parachutes out...

 

Here is the chart:

 

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Hi Mercury, thanks for your updated chart - we are now testing 6076 FTSE & I wondering if we could be heading for sub 6060 maybe even 6020 within the day - It would be a brave person to buy in now expecting the swing up into the recent trading range (be interesting to see if that happens or not, I doubt I'd have the cojones to do that!).  Perhaps this is the Slide down to new lower lows (your arrow indicates the way forward it seems to me).

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Hi Condor,

 

For today at least it seems we are in a Bear move so any retrace rally is an opportunity to add more shorts rather than to go Long for me.  Longer term I expect further drops until we settle at a major potential turning point.  If you look back at my long term scenarios you will recall that in all of them I expect this turn back up but can't yet be sure what happens after that.  This is why my strategy is to swing trade this move (I am heavily short now but will cash most at the major turn (TBC) and only go Long at that point.  all my Shorts are stop protected at B/E so I have confidence in adding more on any retrace at this point.

 

As this move goes on we may get some clarity on US open.  If the European markets retrace back up to a significant level before the US opens then we could see the US taking everything back down again (maybe not on open but soon there after).  Let's see... 

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FTSE 100 just made a lower low (let's see if it closes the hour below or not...).  This move has all the hallmarks of a W3 so if we get a close below 6067 the next low to conquer is 6000.  It would travel straight there of course but any retrace has to be seen as a Shorting opportunity right?

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If by not time to sell you mean intraday I tend to agree.  The time to get Short was yesterday and early this morning.  I went Short at 19.00 yesterday and 07.00 this morning.  On a Bear day the early bird catches the worm...  

 

I am expecting a relief rally soon that might take us to US opening and then I will be stalking more Shorts.  My only concern is that the US markets have been strong and while I'm expecting the rest to be in the grip of a decent Bear, the US may do some quite strong retracing before they join the party.  This may hold the European markets up a bit but that could offer more Short entry opportunities.

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