Market Overview: FTSE 100 Futures
FTSE 100 futures went higher with a strong breakout last week. The bears tried to fade the top of the trading range but got run over with a weak signal. As soon as it closed, only buyers took the price higher. Next week, it is important to see if there is follow-through at the new ATH.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures last week had a strong breakout to the new all-time high.
- It was a big bull bar closing on its high, so we might gap up next week.
- For the bulls, followthrough is important after a large bar, which tells the difference between profit-taking and new orders.
- The bears see it as a buy climax and are looking for a reversal, a failed breakout at the new ATH.
- Last week, we said the tail below was a sign that bears were getting out of the way. They had limit-orders at the prior high and lower. But they needed to scale in to avoid a loss.
- You could argue that because of an open gap, many bears could not reduce their losses. Once they exit buying back shorts, the bulls buy, also increasing the price.
- The bears need a bad FT bar, a bear doji closing on its low, to confuse the bulls more.
- After a breakout, there should be a pullback to start the channel of a spike and channel.
- Can this be a wedge bear flag, a three-push at the high of a trading range? No one will sell low without a sell signal, and they are unlikely to sell the high as it is.
- Limit order traders could buy below the lows of the prior bars before the breakout. Betting that the stop-order sell below would not work.
- You could have also bought weak reversal bars on the way up.
- Always in long, so better to be long or flat.
- Expect sideways to up next week.
The Daily FTSE chart
- The FTSE 100 futures on Friday was a big bull bar closing on its high so we might gap up on Monday.
- It is the second consecutive strong bull bar, so a bull breakout and follow-through. It is likely to get a second leg up.
- The bull channel is tight, so the first reversal should be minor.
- The bears see an expanding triangle, high in a trading range. Expanding triangles can reverse suddenly.
- But ETs are usually continuation patterns in strong trends, and after breakout mode on the monthly chart and bulls buying the moving average, it was likely to get a strong breakout above the ATH.
- Always in long, so traders should be long or flat.
- Traders who are still long have a wide stop here. Some might have it below the double bottom with the outside bar, overlapping from two weeks ago.
- But in a spike and channel, the channel is a magnet. It might be better to scale in there.
- Can you be short here? No.
- The bears had a chance to sell above the bear tails earlier, but the body was so small it was not a good stop-order sell below. Once they tried three times, it looks like they had given up.
- Bears can argue that a wedge top triggered. But the reversal bar was either too small, or too large, forcing traders to trade it more like a trading range.
- The whole range will likely be used for a measured-move up.
- Expect sideways to up next week.
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