FTSE100 - Daily Analysis

[donaldprice]

It appears that on a 4 hourly chart we seem to be getting some strong divergence showing on FTSE100. Looking at this from a 1 hourly chart, I can see a significant retracement is about to form, i am estimating a retracement beginning 6700 level as their appears to be a rising wedge formation being formed and therefore W5 waiting completion i believe this will be a possible opportunity to short, feel free to suggest something different.

 

[Mercury]

I see where you are coming from  but it is not a classic Triangle formation in that you are using a high from the previous wave.  I suggest if you want to do that you need to draw the triangle on the Daily chart and take into account more past price moves, which isn't that clean either as it happens.  I'd rather see a classic ending Triangle, which may yet form on this sharp rally but even more important is to watch what the US markets are doing, S&P is a hairs breath from fresh all time highs.

 

Nevertheless you are right that Stock indices are in watch mode for an eventual topping out.  Some may feel this rally has much further to go and it may but when we are in this territory it is virtually impossible to call the top.

[Guest pratt123]

.Wow. Massive rallying by all markets, US at all time highs. The big fall is just round the corner..

 

In in meantime, time to make money short term. What does everyone think is the best bet to put your money on now? Short the DAX and DOW? Or will the wise sit out and wait till it crashes and then go short big style and long in gold?

 

Appreciate everyone's comments  

[Mercury]

  check out  thread re S&P stops where we discuss the hazards of chasing the tops.

 

In terms of "The big one" most people I have spoken to do think it is on the cards, though how big and when is not something many will agree on.  The key here is to see confirmation of the turn before getting serious about shorting (i.e. get in on a pull back).  This is what we are currently stalking on GBPUSD.  I think FX is where the near term action is unless you want to ride the final stage of the stocks bull (I'm too bearish of mind set to do that so I'm waiting for the next reversals).

 

Commodities offer something.  I am Long Dr. Copper and I think Oil will stage a final leg rally but could also fall from here (see separate threads on that and note commodities is not for the faint hearted...).  You already know my views on Gold and Silver is similar.

 

Regarding FTSE100 I think we are coming to an interesting moment (checkout my charts below).  If FTSE is in retrace and will not make fresh all time highs in line with the US then the 6740-80 zone is a likely retrace termination point.  This is also a junction between the Fib 76.4% (Weekly chart) and the up-sloping resistance tramline.  On the 4Hour chart I see a final 1-5 of 5 wave nearing completion and strong Neg Mom Div in play.

 

This may turn out to be just a short term retrace but that too would be ok if you get in quick and move stops to B/E then any subsequent rally will take you out for no loss while you enjoy a free bet on a large drop.  Still you have to practice good money management here and ensure stops are set at a reasonable level for the market and you account.  If you can't do this then wait for the turn to emerge and take the second opportunity.

 

 

[Mercury]

Textbook turn at the 76.4% Fib, if you got in short well done, remains to see if this is a Wave 2 top or not, tight stops required until this evolves for me.

 



[Mercury]

FTSE100 coming up on first support zone.  Could either get a rally up beyond the recent high or just a small retrace before a stronger drop.  Dax remains more Bearish just now while the US futures indices are stuck in congestion.

 

Wonder what you Day Traders make of it?

 

 

[Guest Icarus]



[Guest Icarus]

This trade has just triggered.

[Mercury]

Did you enter Short or are you waiting to go Long at the bottom?  If Short how did you decide when to enter?

[donaldprice]

I entered short, at 7060 level, once in reached close to the 75% fib level with a very close stop, very strong divergence, been shown. Not to shore this is going to be a major turning point, but this fell same time as oil inventories came out, not shore if their was a correlation. Been very difficult trading this indice, in trying to call the top of this market, but best seek and await the opportunity once the technicals are right.

[Mercury]

Dangerous game to try and anticipate a turn before it has happened, especially in this central bank fueled market.  Better to wait for a confirmation of a turn.  I my view any retrace now will be relatively short before a final wave 5 up to the top (at least for now) and then we will see.  That also fits with my estimated timing of end of Q2 results, NFP will be interesting next week. 

[Guest Icarus]

Through my analysis I had an area of 6778 to 6808 to short the FTSE on a swing trade lower, I had an order in for equal amounts for 6778 and 6808 but only the first one triggered. 

 

I have closed half the position today for 80 pips and moved the stop to break even now.  I expect we may first revisit the 6778 - 6808 area prior to the move towards the center line of the pitchfork.

 

We will see. 

[Mercury]

Ok I follow your logic on entry strategy , thanks for that, I too had the same area as a resistance zone.  Your chart suggested you were after a bigger short, is that still the case or have you reevaluated?  Are you longer term Bullish, the second part of your road map shows a rally but I am not clear on whether you currently this this goes to new highs or is just a retrace, or don't yet know.

[Guest Icarus]

Well I expected we would see 3 waves lower from the 6778-6808 area  - I don't know if this has already started or we are merely resetting things a little for the bulls to drive higher to retest my short zone area once again before the move lower.  My instinct is the latter as the market seems a bit to orderly (no panic)

 

I think if we see a daily close below 6610, we will likely head towards the center line of the pitchfork.  At this point I'd take another look and decide to switch long only if the market conditions support it.   

[Mercury]

We haven't had a post on the stock indices for a few weeks (other than the Dax a few days ago) and no wonder.  Indeed I am almost as loath to post as I am to trade stocks.  I don't know whether most forum users are waiting in the tall grass for the inevitable (I think) big Bear to start raking the market or chasing the wally rally (I think) for all it is worth but for what it is worth (and that ain't much, unless I'm right...) I see a potential end point to the FTSE in sight.

 

This presupposes that the FTSE is in a Retrace rather than a motive wave up to higher highs.  In terms of Fibs we are coming up on the last one, the Fib 88.6%, after which we are looking at double top or higher high...  In addition to this Fib (and I hate the 88.6% usually but these are unusual times) there is a strong tramline line from the weekly, Neg Mom Div on Daily, 4hourly and hourly and a decent EWT count coming up on a final wave 5 of the wave C to a retrace point.  Add to that some Triangle action and a turn in or around the 6950 mark is a distinct possibility.  Of course whether that is THE turn or just another small retrace remain to be seen.

 

From a fundamentals point of view I am looking for reasons the FTSE might turn before the other markets (DAX and Large Cap US look like having a bit more to go).  Well  got me to thinking about commodities again and a drop in these can take the FTSE in a different direction than the other indices owing to the heavy resource sector in the FTSE relative to the others.  Commodities have been on a charge: Iron Ore, Copper, Coal, Oil even Gold and Silver but what if it all comes to an end (retrace in the case of Gold and Silver)?

 



[donaldprice]

Hi Mercury. For what I can make out within the FTSE100, is that we have been riding an ABC, currently therefore in a C wave. I would not want of course to call this, however if their is to be a strong retrace I would question now; are we about to start the 5thwave up from this current C wave. Technicals do suggest that considering RSI and Momentum showing bearish divergence. On a monthly chart, I would not want to call a top just yet, however and please suggest otherwise, but their appears to be a possibility a strong retrace could occur to achieve the ABC before moving a leg higher.

 

 

[Mercury]

I am not calling the top either , can't until we see a confirmed reversal signal, which we don't have yet.  US large Caps look like they have more to go and the Germans seem to have shaken off their gloom and gone Bullish again (last gasp rally on the Dax?).  My working scenario is that no one else joins the US in fresh all time highs but for that to happen FTSE needs to turn soon.  If it does then our A-B-C retrace holds.  However we are getting dangerously close to the previous all time high of 7127 and the closer we get the more likely a fresh all time high is, obviously.

 

The Triangle on the Daily chart is suspect because it is running out of room to trigger a turn (the rule of thumb is a break of a Triangle before 2/3 of the length).

 

There are a few zones of resistance as we approach the past all time high and the Fib 88.6% is simply the first of them.

 

The wises course of action is to wait this one out until we see a confirmed reversal (if you are Bearish - if bullish, well I have no idea...)

 

This morning we are seeing the market on both FTSE and DAX at key Fibs (88.6% and 76,4% respectively).  We could easily get a turn on both here but will it be THE turn or just a small retrace before a final push?  Who knows.

[Guest Rich88]

If the Ftse holds at the 6810 area then im expecting the upward movement to begin again.

[Guest Rich88]

6810 held, looking for 6870 target for tomorrow 



 

[Mercury]

FTSE is getting interesting now, as are all stock indices.  It would be easy to start jumping onto a Bear bandwagon but I am still unsure.  However I get a warm and fuzzy feeling when a market follows my road map and so far this is happening here with a decent rebound back off the potential market top at the Fib 88% level.  So far the wave pattern is more motive (1-5) rather than A-B-C (retrace before a leg higher) but it isn't finished yet so that is just speculative at present.

 

This morning there is a break below the iceline of the "top" and possible ending Triangle, which has had several strong support touches.  A confirmed break here (hourly close below) sets up further moves lower with several possible support levels.  My current forecast is for a termination of this move somewhere between 6700-6750 with an outside chance of 6600 coming into play.

 

Overall my bigger picture roadmap remains intact and I expect a retrace of this move back to a possible double top (or slightly higher high), keeping an eye on other markets, especially US large cap and Nasdaq is vital during the coming week or so and of course we await the inevitable fresh round of double talk coming out of Jackson Hole over the weekend.  Mush more critical for the long term trend will be NFP on Friday week...

 



 

 

[Guest Rich88]

I'm looking for solid support at 6800 before we continue higher to 7000. On the other hand a break below this would put a top in. Any thoughts on this?

[Mercury]

So far the 6800 iceline has held up despite a swift break and return fakeout.  Similar set up in the Nasdaq and price is so far contained within a Triangle on the Russell but the US large Caps are showing some short term weakness.  However my lower tramline has yet to be hit, may not be but I wouldn't be surprised to see a bit more softness tomorrow morning, maybe into the support zone circa 6750 before a rally, perhaps on Yellen speech?  My working assumption is that this could be the final leg up but time will tell on that one...

 

For now there are better markets to trade unless you believe the bull is going to run and run, and I don't.  I waiting on the sidelines for a sign of capitulation and once we see it then Shorts are the sure thing all the way down (in 5 large waves of course...).

 



[Dyingbreed]

1Hr Bollinger Band has been broken, Looking to sell break below 6956 to target 25 pip. Break has to happen within the Next two hours, in order to be effective. Your Thoughts???

[Dyingbreed]

1Hr Bollinger Band has been broken, Looking to sell break below 6956 to target 25 pip. Break has to happen within the Next two hours, in order to be effective. Your Thoughts???