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still more short term downside risk - levels to watch for

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So in regards to this latest chart @elle are you saying that there is support at the blue dotted line or is that just the price line currently? Assume the dark purple is buying area. OR are you saying that the dotted line is actually an area of support already? what makes the dark purple an area of buyers? Apart from it being that most recent area before lift off? Curious on these replies :) 

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blue = support      -     blue zones are where buyers were before, so maybe they'll be there again ???  Wide range bars are almost like gaps & I look for gaps to be filled (eventually! )   Note how, currently price has bounced off of that blue line & is now back up testing the light blue zone but can't get through at the moment - these zones & line are getting reactions so I always note them on my charts for future reference

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Posted (edited)

The thing is , I don't know which way price will go, I have to make assumptions

Edited by elle
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7 minutes ago, elle said:

The thing is , I don't know which way price will go, I have to make assumptions

absolutely! tech analysis is all about giving percentages to likelihood isn't it. Not saying "its going up because of this line" but more "given historical buying at this particular price level it would be likely that it will see additional buying at the same level in the futures."

Thanks for previous explanation above as well. Do you have a trade on this one?

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How I see the market - eventually one side will give in

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They were all following Dow down starting at 19:00 yesterday but now Dow attempting to push back up.

1 hour charts. >

ax.thumb.PNG.427774b7492935e3e69408178abe718b.PNG 

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All a bit too down in the weeds of short-term timescales for me to comment on but horses for courses as we always point out.  I do agree with the general sentiments above though.  It is about price discovery for actual trading.  However I do like to map out scenarios with technical analysis and identify triggers for trading.

Looking at the FTSE100 1 & 4 hour chart I have a Flag formation (not completed yet) just about where I had signaled for myself in advance that it might play out (always get at least 1 in a motive wave, sometimes more than 1).  If this one does complete with a breakout rally (it will not be a Flag if it breaks below!) then the motive wave should, roughly, complete between 7800-7900.  Note 7900 is just above the previous all time high for the FTSE100.  At this point any retrace would most likely be a EW3-4 with a final push to the top in or around 8000.

US NFP is the most likely catalyst for both the Flag breakout rally tomorrow and indeed a possible topping out in early Nov (subject to reassessment by price action progression of course, could easily come a month later).

Therefore, if we get a Flag breakout rally, confirmed by a new higher high I will be following the outline road-map in the attached Daily chart.   

FTSE100-4Hrly_041018.png

FTSE100-Daily_041018.png

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same theory as lower time framed charts

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Sure @elle and I do use levels on all time-frames I look at but I have found that no single technical analysis tool works all the time, therefore I blend a number of techniques.  For instance I have found that support/resistance levels work best when aligned to a strong motive wave such that in a rally support levels are more reliable that resistance and vice versa.  This is why I attempt to divine (I chose the word advisedly) a likely road-map, and major trend turn points.  This works better on longer term time-frames naturally, which is why I stick to them, using short term (1 hours/4 hour mostly) to manage entry/exit in fine detail and to manage in play trades (i.e. decide when to take profits).

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Sorry, meant to add that a case in point re above is unfolding in the markets right now whereby I reversed my position on NASDAQ and SP500, based on price action and a breakthrough support levels that I deemed to be inconsistent with my previously held road-map on a short term basis.  My long term road-map is unchanged at present but adjusted to allow for an earlier retrace.  At present FTSE100 is still ok but not sure if it can fly in the face of US markets corrections, if they are confirmed...

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as per earlier chart :)

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"Wide range bars are almost like gaps & I look for gaps to be filled (eventually! )"

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Sorry @elle I don't really follow your logic on wide range bars.  Gaps I get and agree, except for break-away gaps of course, which are indicators of a direction change, especially if associated with an price island.  Maybe on shrot term time-frames the wide bar thing works, I don't have a view on this, but on long term time-frames they are reflective of a strong motive direction, often occurring in a wave 3 long term rally and especially in a crash.

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So all 3 followed Dow down yesterday at 19:00 (as observed previous post above) and then all 3 followed Dow down again today at 14:00. Just say'in.

ax.thumb.PNG.7662f13ad6046cd11f5d7cea230225c5.PNG

 

 

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Just a word on gaps to add to the discussion above, a gap can occur at anytime and happens because buy or sell orders wipe out multiple levels of opposing orders instantly so the next price stamped is some distance away from the start point. If this occurs out of hours or between bars there will be a gap but if it occurs during an open bar the will be a spike stamp which therefore can also be considered to be a gap.

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FTSE is an interesting one right now.  I have reversed my previous assessment, somewhat.  I still think we will see fresh all time highs before the Bull is over and I am still targeting the 8,000 area for that but the move up that culminated recently did so right on the Fib 50% (a natural retrace level) off the recent all time high (Pink 3).  This suggests 2 scenarios to me as follows:

  1. The recent move up is a W1 and will retrace to W2 (blue) and possibly the tram-line breakout area (Fib 76/78%).
  2. There is still another leg down to the W4 large scale retrace on or about the LT trendline support (or maybe a bit lower with a spike through on the Weekly chart (could happen through next week while the US indices are falling harder.

#1 is a more elegant solution but #2 fits better with a US 3-4 retrace, which is my current view pending NFP price action.

There is always the danger that the FTSE just follows the US down hard of course but let's see what happens this afternoon before making any further judgement.  Note a rising GBP, if we see that is currently a headwind for FTSE100, but that correlation can change at any time.

FTSE100-4Hrly_051018.png

FTSE100-Daily_051018.png

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My tram-line breakout zone was broken through but not strongly or decisively.  The market is currently hovering just above the 11 Sept low, which I had previously marked up as a wave 4 retrace turn.  If the market breaks below this then that W4 may occur at the long term support trend-line (purple line) and then a final rally to the top can begin.  IF the market holds above the 11 Sept low and rallies away it will have traced a very deep retrace (Blue 1-2) indeed, a double bottom.  If it breaks the support line, well let's think about that if it happens...

For now I have either of the above turn and rally scenarios in play supported by good PMD on 1 hour and 4 hour charts.  I like the blue 1-2 retrace set up better from a pure EW perspective but we'll see what price action brings us today.FTSE100-Daily_091018.thumb.png.96da79cc275da41cf4d32b31dafa9955.pngFTSE100-1-hour_091018.thumb.png.b9d5d6c269bc4284fc90b13a39f0c0f1.png

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What a difference a day makes!  My LT trend-line was blown through with just the briefest of hesitations.  Doesn't mean it is not still active though if the market returns above it quickly it will remain active (it is a weekly chart line).

My bias is for another leg up on stocks and therefore a fairly strong buy-the-dips really but this will be US led I feel.  Looking at the FTSE in isolation I see an A-B-C formation of a major retrace (Pink 3-4).  The final leg down is fast a strong, in keeping with Wave Cs (albeit this one is particularly fast and strong).  Playing it long is a "catch the falling knife" trade, not for the faint hearted!  Problem is if you don't you will find it hard to get in on a fast rally, as we saw with the last major drop.

Anyway FWIW, here is my current assessment of the FTSE 100 via technicals, and I note there wasn't much in the way of news or data releases to accompany yesterdays move, leaving commentators scrambling around for the usual nuggets (Trump utterances, inflation fears - seriously? business needs inflation for growth, the whole point of the Central bank support for the economy - if you believe in that - was to avoid deflation)

So back to the charts:

@Caseynotesis right to zoom out to the Weekly to recheck things and I see 2 likely turn and rally points on the weekly and Daily charts.  The first is at 7,000, the second at 6,800.  The former has a very good support/resistance track record and the latter also has good support credentials and a Fib 50% line.  Could get a spike through 7,000 to 6,800 on US opening and then rally.

I see no NMD on LT charts at the previous market top so am not convinced we have seen the top.  Also USD is dropping again, which is counter to my stocks Bear set up.

Stochastic and RSI are oversold on all timelines (very much so on the Daily).  On the hourly I also have PMD and a nice upper tram-line, which offers a trading opportunity if broken through.  Lower one is much weaker and speculative but does intersect nicely with 7,000 support zone.  Additionally the EW count work well for a Wave C (1-5 internal wave count).  If a rally does  ensue we are looking at about 1,000 points back up to the Top.

2 options then as follows:

  1. Take a speculative at the 7,000 area and it that fails look at the 6,800
  2. Wait for all that to play out and go Long on the upper tram-line break

Good hunting!

FTSE100-Weekly_111018.thumb.png.bb4e17152721f0fba0d199a57c5beb28.pngFTSE100-Daily_111018.thumb.png.52329bfe641111baee1ab1d7b92b50aa.pngFTSE100-1-hour_111018.thumb.png.0dd9655b49ca6ccdbe0bbc693aed6502.png

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update of an earlier chart :)

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Looking at the weekly chart, is today going to be a little breather before a final push down to around 6930 then back up again for a rally Friday afternoon to finish above 7000 / 7100. Similar to the 5th Feb candle. Or is it different this time and it's a drop that is going to stick.

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Nice spike and reversal price action just pre and post US close set up a small rally with a small retrace overnight.  Can't rule out another deeper retrace to set up a stronger rally.  I will need to see a break of my upper 1 hour tram-line around 7150 and then a further break of next resistance level around 7250 to be more confident but with all markets stalling at key long term support levels and other indicators suggesting another leg up to a final top is likely then the chances are decent for this turn to stick.  However, as said, will need to see some more rally action in the coming few days and who knows what the weekend will bring.  I think the closing price action on the US markets tonight will be a useful indicator of professional sentiment

FTSE100-1-hour_121018.thumb.png.7c02535dff085ecf234ea1563cf3410f.png

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any longs now have an overhead zone to get through. For a long , I would prefer price to be above that previous demand zone 

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FTSE100 now broken through my top tram-line, albeit not forcefully yet.  I will want to see the near term resistance also broken through at about 7100 but the set up remains encouraging for a rally.  Other indices are making bullish moves too.

FTSE100-1-hour_161018.thumb.png.3ae572ccc2c59d13e1094999c82e595b.png

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Indices final rally to all time highs remains on while lower support remains intact.

FTSE100-1-hour_191018.thumb.png.d9eb583cee3434bbf7d5ff500ee62604.png

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Despite lower lows on main US markets (excl Nasdaq), Dax and Nikkei, the FTSE100 is currently holding just above the Wave 4 (pink) low with a double bottom.  May get another test or two yet and at present there is PMD.  This is an aligned set up to that on SP500, albeit without the lower low.

FTSE100-1-hour_231018.thumb.png.eb7eadcc3602365fd6735772d153075c.png

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