FTSE 100 1-day classic patterns
Updated
What has the highest probability of occurring?
Since early May 2021 price has rotated from 7200 resistance to 6800 support and back again on 2 occasions.
There are two classic patterns forming within these rotations.
The broadening top is currently valid with 3 tests of the upper trendline. The recent rejection at 7200 appears to be what Bulkowski describes as a partial decline having tested the 50% fib retracement.
This projects a target of 7700.
There is also a triple top that would need to test 6800 support again to become valid.
Further a breakout from the triple top projects a target of 6350, the low of the year. This would fulfil the tape chatter of "a healthy 10% correction".
N.B. these patterns are forming over a 4-month period. It is probable that the eventual outcome will be a powerful move.
Objectively the triple top is not confirmed until a test of 6800 has occurred. So the bias is long in the framework of the broadening top. Given the partial decline it is probable that market participants are already getting long. The long trade is invalidated once price touches the lower trend, validating the triple top. Using 6800 as a stop loss from current levels yields 2R to 7700. If this is too large a stop classic patterns on a lower timeframe should be employed to fine tune stop placement.
Since early May 2021 price has rotated from 7200 resistance to 6800 support and back again on 2 occasions.
There are two classic patterns forming within these rotations.
The broadening top is currently valid with 3 tests of the upper trendline. The recent rejection at 7200 appears to be what Bulkowski describes as a partial decline having tested the 50% fib retracement.
This projects a target of 7700.
There is also a triple top that would need to test 6800 support again to become valid.
Further a breakout from the triple top projects a target of 6350, the low of the year. This would fulfil the tape chatter of "a healthy 10% correction".
N.B. these patterns are forming over a 4-month period. It is probable that the eventual outcome will be a powerful move.
Objectively the triple top is not confirmed until a test of 6800 has occurred. So the bias is long in the framework of the broadening top. Given the partial decline it is probable that market participants are already getting long. The long trade is invalidated once price touches the lower trend, validating the triple top. Using 6800 as a stop loss from current levels yields 2R to 7700. If this is too large a stop classic patterns on a lower timeframe should be employed to fine tune stop placement.
Note
Possible double bottom forming on 7000.0
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