FTSE BULLISH EXHAUSTION?
Updated
I am currently looking to sell this index.
It is no surprise to anyone who reads my ideas ,not many:p, that I am of the option that whilst the latest inflation data coming from the UK has ticked lower, I believe it will again raise its head to bite the UK on its are.
I guess more importantly, I think the inflation data coming out of the US over the coming months will be hot and with that the dollar will rally once again. Although not quite as it did in 2022. This will result in a significant exportation of inflation around the world which will further increase the prices of food, energy and fuel; pretty much everything that is priced in USD. Ultimately hurting the economies which the companies comprising the FTSE rely on. Aside from big pharma and petrochemicals.
Moreover, if you look at the chart above, the FTSE has been in a decent rally since October of last year which culminated in an all-time high milestone of 8000. The rally to date has been moving in an ascending triangle (WHITE) which coincided nicely with relatively strong divergences between the move up to 8000 and the indicators shown (RED).
This is often a good indication of weakness in a prevailing trend and may potentially signal bullish exhaustion. The price broke this triangle structure on 28/02/23 with a failed rally back to support which indicates that we may be looking at a decent move to the downside in the coming weeks and months. As such, I’m now looking to enter a sell trade from here-on.
My POI for this move is anywhere between 8950 and 8130 (current price to top of structure)
As always I will be scaling in my positions as (or if) the price moves higher, which I expect it will until Powell comes out and admits that last months 25bps hike was a mistake.
It’s important to note that the UK economy and this index are not overly correlated because whilst the companies making up the FTSE may be HQ’d in the UK, their market audiences are more global. Please bear in mind that this is not a full breakdown or analysis for an entry, it is just my current thoughts on this market and a very basic o view of why I’m looking to short this index. Please always do your own analysis and always trade with caution.
It is no surprise to anyone who reads my ideas ,not many:p, that I am of the option that whilst the latest inflation data coming from the UK has ticked lower, I believe it will again raise its head to bite the UK on its are.
I guess more importantly, I think the inflation data coming out of the US over the coming months will be hot and with that the dollar will rally once again. Although not quite as it did in 2022. This will result in a significant exportation of inflation around the world which will further increase the prices of food, energy and fuel; pretty much everything that is priced in USD. Ultimately hurting the economies which the companies comprising the FTSE rely on. Aside from big pharma and petrochemicals.
Moreover, if you look at the chart above, the FTSE has been in a decent rally since October of last year which culminated in an all-time high milestone of 8000. The rally to date has been moving in an ascending triangle (WHITE) which coincided nicely with relatively strong divergences between the move up to 8000 and the indicators shown (RED).
This is often a good indication of weakness in a prevailing trend and may potentially signal bullish exhaustion. The price broke this triangle structure on 28/02/23 with a failed rally back to support which indicates that we may be looking at a decent move to the downside in the coming weeks and months. As such, I’m now looking to enter a sell trade from here-on.
My POI for this move is anywhere between 8950 and 8130 (current price to top of structure)
As always I will be scaling in my positions as (or if) the price moves higher, which I expect it will until Powell comes out and admits that last months 25bps hike was a mistake.
It’s important to note that the UK economy and this index are not overly correlated because whilst the companies making up the FTSE may be HQ’d in the UK, their market audiences are more global. Please bear in mind that this is not a full breakdown or analysis for an entry, it is just my current thoughts on this market and a very basic o view of why I’m looking to short this index. Please always do your own analysis and always trade with caution.
Note
Thank you poppa PowellNote
I have three trades running on this idea; 1) 7975 2) 7952 3) 7944
I have closed out trade 1) 7975 manually at 7718 (previous support area)
I have left trades two and three open with a view to closing them at 7668 and 7602 respectively. I will update again when I've closed a position or if there is a change in fundamentals.
Total so far - 257 pips
Note
Trade 2 closed at 7745, (bounce to VWAP)Only trade 3 left open.
Total so far - 464 pips.
Due to a continued strength in non-farms I'm letting the 3rd trade run. Hot jobs market gives the fed more room to tighten.
Note
As i touched on last week, due to factors regarding the FED I have cancelled the TP and placed a tailing stop below 7590. I will update again when the position is closed.Note
Trailing stop hit at 7565. profit 379 pips.Total profit on this idea - 843 pips
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