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FTSE100 - Daily Analysis


Chanakya

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FTSE100 has come back to the neckline I drew on the Daily chart and is finding resistance.  This will be the test of the neckline set up for all the main stock indices.  If it holds here and rebounds we will be on for a decent drop.  If not, well back to the drawing board.

 

Chart:

 

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So far so good!  Market has rebounded back down off the second Kiss on the neckline.  Despite what I said on the US markets thread about another Kiss back (still possible for the US I guess) I think we should be done now with the FTSE.  Stochastic and RSI went marginally over-bought and turned back.  I am anticipating a decent drop from here.  For EW people, we may get a small 1-2 that could coincide with a US markets 2nd Kiss on the Neckline (or just a similar 1-2).  Either way that 1-2 is a good entry point for a Short, if it materialises like that.

 

Chart:



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The high today (6217) was right on the Fib 88.6% off the 18 March high.  If 18 Mar was the top then the market should fall from here BUT there is an alternative view (see my post on making sense of the nonsensical for more on that).

 

Either way the next few days (early next week) should tell the tale and then we can strap in for which ever direction it takes.

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US Markets popped on opening and then dropped sharply with a smallish drop on Oil.  Oil now making another run up, which could complete my 1-5 up and if it turns after that and the Us markets also turn again with it then I think you will see FTSE100 and Dax drop away sharply.  Just remains to be seen if the FTSE makes a new higher high or turns at the Fib 88%, where it is currently stuck...

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Hello all, I believe on the charts the US markets are showing most promising signs of a turn down, followed by DAX, the FTSE and oil charts are still developing and need a few more days to show a conclusive direction. On Dow iam looking for sub 17400 levels.

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Hi All. How is the FTSE100 now priced given the market has just closed - any tips/good advice a I have a Short Open ( at 6207)& wondering what to do - leave it in play ( and not get stopped out by placing protective stop well out, say 6232 ) or  close all square/small profit - so i'm not concerned about what might happen overnight.  Guessing the more expereinced will have a view what to do as must have been through this before.

 

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Condor,

 

There is so much in that post I'm not sure where to begin so the following might come out a bit unstructured.

 

First of all I think you are really asking whether people think the market will go up or down from here...?  Impossible to know is the short answer and you already know what I think from other posts.

 

Secondly, despite the FTSE and Dax being closed the index is 24 hours (as you know) and tends to track the US markets quite closely during their final hours so for clues to what the European markets might do on opening tomorrow watch the US and to a lesser extent the Asian markets overnight.  Typically I find the bigger movements will happen between FTSE close and US close rather than between US and Asian close.  This means if your Short survives US close it will probably survive until the morning.  Things get active again about 7am before the FTSE/Dax open.

 

Third point is a technical one: my view on trading methodology is that you should never enter a trade until you are as satisfied as you can be that it will go in the direction you have analysed.  You set your stops according to the maximum you think it could move against you and still not negate your analysis (also this must fall within your maximum risk exposure profile!  Very important!).  You do not move the stops until the market has move sufficient in your favour that your original analysis has been proven.  If you are worried about your entry it means you are not sure enough in the first place to get in.  Ask yourself why you went in?  (let me know and be honest with yourself and we can discuss that further, it is an important piece of trading psychology!)

 

In addition to the above point, you should never go into a trade until you also have a clear target for exit.  Some people like to "eyeball" this from experience but I favour a more structured approach.  I tend to have several targets (near term and longer term), especially when I still have multiple scenarios in play.  I often play this with more than one position such that I might close the first at the first target and so on.  This is a way of managing psychology also to avoid NOT exiting for decent profit out of greed.

 

As to what you should do now, who knows, depends on the answers to some of the above and how you feel about the strength of your entry point.  If really in doubt get out and wait for a better (could be lower) entry. 

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Thanks  thats very helpful.  I've left alone because i'm happy with my entry and  happy-ish with the Protective Stop - You can probably guess I was trying to trade the channel and because of my Bear view hoping that when it goes to the bottom of the trading range instead of bouncing off the support back up again  it keeps going to a Fib / previous SupportResistance Level for Exit 6060-ish / maybe lower.

I certainly didn't want to ask outright what's it gonna do maybe it came out like that..more concerned about the general issue of running index positions overnight...ive nudged out to 6237.

If it goes out to 6260 area I can re-enter out there me thinks.

Thanks again for your replies , C

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Ok that sounds right to me, especially the reentry if you get stopped out part.  For me getting stopped out doesn't mean you were wrong overall, just on the timing of the entry so unless your analysis is negated you look for the next level entry.  A Short at the 88% Fib could prove a great trade, let's see.

 

As to running positions overnight, that is all part of trading, unless you are a strict intra-day trader.  Again the process of being comfortable with your entry and your stop level and having an exit strategy are crucial here.  Remember Asia can go up over night and they might just be catching up with us so it doesn't mean Europe will open up.

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Well at the end of the US Day I exited the FTSE100 short with a small profit and look to re-enter today on a rally around the 6020-30 area hopefully it will get there & the short opportunity will be even better, especially if a strong drop materialises later.

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aha Yes, I put my protective stop out at 6061 , the FTSE appears to have turned around just shy of 6250 , but of course could surge again and then the oil news would have knocked me out of two trades.  But my hopeful view is that reality of the situation will overcome any bullish nonsense and the FTSE will fall again.

Actually the Oil news ( which may prove a fake anyway) might have done me a favour in activating my Short set-up......... time as always will tell.  C

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Well yesterday was exciting!?  Not to say disappointing for Bears but does this mean the Bull is on to all time highs?  Not until it breaks the Nov highs.  It is tempting to turn an run with it but this is a dangerous time (same on Oil actually).  My plan is to wait and watch and keep analysing until I see something break.

 

As for the FTSE, well I still see the market in a retrace Triangle, albeit a very strong one.  If there is to be a turn back down today/tomorrow it is likely to be in or around 6325.  Failing that the 88% Fib 6380 but after that we have to be eyeing the Bull (watch out for a sharp retrace before the next phase of that Bull though).  What is still bothering me is that the stock markets have not yet had a decent retrace.  Even if this is a Bull to all time highs there ought to be a decent retrace phase.

 

What do people think?

 

Chart:

 

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hi Rich88,

 

I agree the overall picture is similar to 2008/09 but the strength of the retraces, especially on the US markets, is different and that is no surprise given all the central bank tinkering.

 

Looking at the FTSE100 Hourly chart, which is set similarly to the US, I have to say, "somin gots ta give!"

 

the move up today was very steep, they don't usually get sustained and again I say, exhaustion buying?  Large neg divergences on the daily and massively overbought in my opinion.  We are fast approaching the 88.6% Fib from the Nov 2015 turn.  Will this be the resistance this market needs to send it back down?

 



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