UKX ShortShould've waited for price to retest 200sma. Still expecting a drop to 7260 very soon. Stopped out
FTSE 100 Index
UKX ShortShort to 7260 area. Price has violated 200sma, might retest but I'm not expecting it to break back above.
FTSE 100 - Potential Head & Shoulder, Eyes 7260Treasury yields hovering near one-month lows indicates the recovery in the FTSE100 and other risk assets is likely to be a dead cat bounce.
The daily RSI on the FTSE 100 chart shows a bearish breakdown from the channel formation.
Furthermore, we see a potential head and shoulder with neckline around 7260 levels.
A weak close today would establish a falling tops formation.
Overall, the index appears on track to take out the rising trend line support in favor of the neckline support seen around 7260 levels.
FTSE100 - Daily close below 50-DMA would be bearishFailure to hold above the rising trend line (coming from June 24 low) followed by a daily close below the 50-DMA which seems to have topped out, would signal a major trend reversal and open doors for a sell-off to the magical 7000 figure.
50-DMA stands today at 7273
On the higher side, only a daily close above 7394 would revive bullishness and open up upside towards fresh record highs.
FTSE 100 – rising channel is still intactDespite the failure at the 50% Fib expansion level followed by a two-day drop the outlook remains bullish as the rising channel is intact.
The RSI has breached the channel to the downside, which is a slight cause of worry, although bulls have little to fear as long as rising channel on the price chart remains valid.
However, buyers are seen returning only after a move back above the 7354.1 (Jan 16 high).
FTSE 100 could test 50-DMA support Friday’s break below rising trend line followed by failure to retake the same on Monday and Tuesday coupled with bearish 5-DMA and 10-DMA crossover suggests the index could test 50-DMA support of 7200.
On the higher side, only a daily close back above the rising trend line would revive bullish view.
FTSE 100 outlookBreak above 7300 (upper end of the Bollinger band on 4-hour chart) would open doors for a cut through 7354 (record high) to a fresh record high of 7400 (upper end of the Bollinger band)
Bearish scenario: Failure to take out 7300 followed by a violation at the session low of 7268 could yield a sell-off to 7184 (rising trend line).
FTSE 100 – Plenty scope for rally except for January’s bearish iMonthly chart
The monthly RSI is well short of the overbought territory and also well short of the highs seen in 2007.
Thus, the index has plenty scope for a rally to 7354 (record highs) and beyond. Once 7354 is breached, the index could test the key psychological level of 7500.
The only cause of concern is the January’s bearish inverted hammer formation.
FTSE 100 eyes daily close above 7200The rebound from 5-DMA coupled with the bullish 5-DMA and 10-DMA crossover and the daily MACD turning higher suggests the index is likely to test 7222 (weekly 5-MA).
A daily close above 7200 appears likely. That would confirm the pull back ended at the last week’s low of 7099 and would open doors for a re-test of record highs around 7350 levels.
Resistance 7205 7250 | Support 7175For today I am looking at Fridays resistance and the daily pivot at 7175 to hold as support on any initial dip and then a rise towards the 7248 level. I am thinking we will get a dip back from here towards 7200 before we get a bit more a bullish push up over the next week or so. Certainly for today those are the two levels that are of immediate interest. Below 7175 then we have support at 7149 on the 2 hour.
However, we are still nudging the top of the daily Biana channels at 7186 and 7195 whilst the top of both the Raff channels are at 7205 and 7215 so the bulls might not have it all their own way. As such I wouldn't be surprised if a quick charge from the bulls out the blocks sees a bit of a dip back form the 7205 area to test that 7175 support. If the bears were to break this level today then the bullish outlook weakens considerably and a trip back down to 7130 and the 7100 recent low area looks probable.
The past week or so has been a bit choppy on the FTSE between this 7100 and 7200 level with neither one side or the other really getting a decent handle on it. The bulls have come the closest with Fridays rise so it will be an interesting week to see if they can build on that.
FTSE rising wedge developing?The current rise looks like it has the potential to become three waves that might be the start of a rising wedge. C=A in the 7170 area. Of course it can also go straight to the 7280 target, but that looks less likely.
FTSE 100 - watch out for bearish divergence on 4-hour chart The RSI is hovering in the overbought territory, however, the bullish momentum is very strong and it would take more than just overbought RSI to trigger a correction.
A potential bearish price RSI divergence could yield a corrective move to 7122 levels.
Taking note of the critical levels on the lower side is very easy when the index is at record highs. However, the challenge is here to spot key levels in the uncharted territory.
Resistance - 7345 (red trend line)
Admiral Group complets head and shoulders topAdmiral is looking pretty sick while the overall market hits new all time highs. The shares have failed at trend resistance and also the neckline resistance of the top pattern. The shares are making new lows on a relative basis and look set to continue lower in the near term. The shares will be particularly vulnerable should the FTSE100 undergo a correction. Medium term target is 1375p
Sage Group ready to roll over?We are on the hunt for short ideas as we expect to see some form of pullback in equities in the short term. Sage Group is in a long term downtrend and has underperformed the benchmark index over the past 1-3 months on a relative basis. The shares have rallied into downtrend resistance as well as a combination of the 50 & 200 day moving average. There was also a bearish engulfing candle on Tuesday. We therefore expect to see this fall in the short term. Stop loss at 667p, targeting a move to retest the recent lows around 620p
How much further for the bull run? 7250 resistanceAs I write this we are in a fairly steady bull trend since the start of the trading year, and with the bulls breaking and holding above 7200 on Friday, it’s holding up, despite looking toppy. The reason I say that is that we have a daily RSI reading of 85, and whilst this can remain overbought (or oversold) for a while, while the markets move higher or lower, eventually it will drop. I can see 7250 was looking like a decent resistance level and that has formed as the top of the daily channels for today, with both the 10 day and 20 day showing that area as resistance.
To start the week I can see gold holding its lower support area at around 1170 and moving higher which might well tally with a downturn in the indices this week. Ideally I am looking for a move down on the FTSE 100 to the 7060 area where upon a decent swing long entry presents itself. This could then see a rise towards 7350, if the bulls were able to break a potential double top at 7250.
GKN failing at resistanceWe like GKN over the medium term and hoped to see the shares break to new highs. This is looking increasingly unlikely in the short term as the shares stall at resistance. The bearish divergence on the RSI and the relative ratio is a concern. If the shares close at this level or lower (329p) then we will also have a nasty looking bearish engulfing candle.
Maybe a chance for a speculative short or to close longs and reassess.
Legal & General taking out huge resistance levelLegal & General is currently trading above major resistance. The break of this level suggests that the medium to long term outlook is positive from here. We will wait to see if this break can hold on the weekly chart before committing longer term. In the short term the momentum is strong and further gains could be seen. Gap resistance around 267p and the 78.6% Fibonacci level is the short term target.
Sell Marks & SpencerMarks has rallied into multiple levels of resistance on the daily chart. This is the top of the range where previous highs have stalled. It is also the 200 day moving average. There is divergence on both the relative ratio(vs UKX) and the RSI, which suggests the momentum is stalling. Sell with a stop at 364p, targeting a move towards the lower end of the range at 308p
FTSE possible abc rally patternFrom the low at 6676 FTSE appears to be trying to complete an abc rally to a new high where c=1.618*a at 7200
FTSE possible W3 target at 7280At 7280 FTSE will be at 1.618*W1 which is very likely the target for wave 3. Notice the Wiv low at almost exactly 38.2. The recent action appears to be a three and might be the first part of a rising wedge, or the middle part of a flat. It can also be the 5th wave of course if W4 ended at 'b'.
2017 to be a good year for Johnson Matthey?We are a fan of Johnson Matthey over the long term. The recent correction looks to be a great chance to buy the FTSE100 chemicals company. The shares have formed a channel on the weekly charts and also found support on a relative basis versus the index. There is big resistance at 3575p, which if overcome could open up the upside towards 4000p and beyond. The long term uptrend suggest that new highs will be seen at some stage, a weekly close above 3120p and we will expect to see 3575p before too long.
