Market Overview: FTSE 100 Futures
FTSE 100 futures moved higher last month in a bull channel, but the bar had a big tail. Who is selling? Bulls are taking profits after a strong breakout. Bears want to close the breakout gap, and bulls want a pullback to buy again. We have been in a trading range for a long time, so it would not be surprising if we fell back into that price action behaviour.
FTSE 100 Futures
The Monthly FTSE chart
- The FTSE 100 futures moved higher last month to a new ATH in a bull channel.
- It was a bull bar with a big tail closing below its midpoint, so some computers will see it as a bear bar.
- Bear scalpers see it as a possible signal bar to sell above its high with a target of getting back to close the bull breakout gap below.
- It is a 4-bar bull microchannel, so traders expect the first reversal to be minor.
- The bulls see a bull breakout above a prior high in a bull channel. This is likely leg 3. Some bulls might argue it is strong enough for a reset. It will depend on whether the breakout gap stays open.
- The bears saw a bull channel with closed gaps—exhaustion gaps—and were able to sell new highs and make money. If limit order bears can make money, the trend is not strong.
- Bulls want the BOP gap to stay open as well as the microgap.
- Bulls will sell below the low of a prior bar and a 30 – 50% pullback of the last leg.
- There is quite a distance to the MA, so some bulls either took profits or might start above this bar and will look to buy lower again.
- Bears want a big bar like prior-March, with a big tail to turn the market more sideways.
- The market is clearly always long, so we should pull back here as the market gravitates to uncertainty.
- The market expanded the range considerably, so we might need some small bars to complete the pattern.
- Always in long, so traders should expect sideways to up next month.
The Weekly FTSE chart
- The FTSE 100 futures went lower last week with a bear doji with a larger tail above.
- The bulls triggered a High 1 above a bear bar, a low-probability long entry, and the bears scalped.
- The bulls saw a strong spike and pullback to the prior low in a microchannel. They bought in the gap between those two bars.
- It was a volatility expansion pattern – big, small, big, then sideways. Traders will expect more sideways and then a second leg up.
- The bulls want Low 2 to fail below this bar and reverse up. But 4 bear bars might need a second leg sideways to down. That second leg might only be one more bar.
- The bears want a follow-through closer to the MA. Right now, they have enough distance to offset the low probability of the trade.
- Because we are about 30% of the pullback leg, some bulls might be waiting for more value, which is a bit lower. But buyers are waiting to participate with the tails below each bar.
- So likely wedge bottom on a lower time frame, the bulls need a good signal bar. We might now find more sellers up near the bull exit.
- Always in long, so traders should be long or flat.
- Expect sideways to up next week.
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