FTSE this week (FTSE:UKX)
Despite the FTSE 100 (UKX) not actually achieving our drop target on Friday of 7,050 points, it came pretty close and, we suspect, simply ran out of time. Things are not looking great for London, given the index closed the session lower than any point since 2016.
The situation is now slightly unpleasant, with the market moving firmly into “lower low” territory, doubtless needing Mrs May or Boris do something important which shall prove capable of driving the index back to sanity above blue – currently 7,285 points.
It’s not now difficult to imagine a scenario where weakness below 7,045 points will now drive the FTSE back toward 6,970 points initially, probably sufficient to generate a fake bounce toward the red line.
But make no mistake, we are realistically looking at weakness toward 6,850 points and very probably less still. The post Brexit vote uptrend has finally broken, unleashing the dogs of “oh hell”.
We mentioned a “fake bounce” earlier. This is one of these strange market phenomena, doubtless caused by the gullible gang who when viewing a price, come to the sensible conclusion it can not fall any further.
Experienced market traders tend be painfully aware that in a falling market, there is no such thing as bottom. Until it bottoms!
Painted on the chart in thick Green ink is a line around the 6,400 point. This particular level has a few criteria suggesting some sort of realistic bounce should occur, if only to generate sufficient force for further drops.
What remains quite odd is the scaling for the immediate drop cycle as once below 7,000 points, weakness in 200 point increments starts make a lot of sense.
Our suspicion; this is due to the staccato behaviour of last year where the FTSE essentially did nothing.
Unfortunately, such is the pace of descent now being inflicted we dare not take any rise seriously unless the market somehow manages better blue on the chart.
This would be pretty significant, allowing an initial 7,350 points with secondary a longer term 7,525 points.
For now, the FTSE appears in decline, similar to Top Gear…
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and “top secret” software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know “how it worked” with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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