Market Overview: FTSE 100 Futures
FTSE 100 futures went higher last week, reversing the week before. Two legs down after a very strong breakout. The bears want a third leg, but with the daily chart going always in long, it would be better to be long or flat next week. It can go sideways, but I think the selling was profit-taking rather than swing bears.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures went higher last week, with a bull bar closing near its high and a small tail.
- Some traders see the micro double bottom and the 2-bar reversal with the week before.
- The bulls see a breakout and follow-through, and now they have two legs sideways to down—a High 2. This is a classic setup for getting long in a trend.
- The bears argue for a parabolic wedge top, 3 – 4 legs up, and now they want two legs proportionate to the pattern.
- But they would need to include legs from BOM – which I think doesn’t count. If you look at March / April as the start of leg one, then leg 2 was the strong breakout. So expect two legs sideways to down before a final leg up.
- The counter-argument is that when it is unclear, traders will look at the trading range behaviour to persist.
- A 50% pullback after a bull spike is a buy setup, and traders will look for the market to stop going down and try to get long.
- Most bears should exit after a High 2.
- It was a big-small-big pattern and traders expected a pullback and then trend resumption.
- They can argue 5 bars down is strong, so they should get a second leg / bar sideways to down. And they probably will, but with a tail below.
- But it’s dangerous to sell here above a strong bull bar and a weak sell below it. The MA and BOP are there. So, I would be surprised if all the limit order traders get filled.
- Open gaps are a sign of breakout / trending behaviour, and you should rarely trade against the side of the gaps.
- Some traders will argue that we should be always-in short, but in my rules, we did not break any swing points of the bulls, so we are either always long or sideways in a bull channel.
- Expect sideways to up next week.
The Daily FTSE chart
- The FTSE 100 futures went down briefly on Friday with a bear doji.
- It is the fifth higher-high in this tight channel which crossed the MA.
- It was a 4-bar bull microchannel, which got broken on Friday and found buyers below, not sellers. Thats a problem for bears.
- It was three legs down, and last week, the inside bar, which was the start of leg 3, just had a breakout above it and a pullback test. This is another problem for bears.
- So, a wedge bottom after a HTF bull breakout means trend resumption is coming soon.
- 5 – 6 bars up, so we might go sideways around here.
- It is a weak buy above the bear outside bar, which also got a bear breakout below.
- However, some computers will see the close above the midpoint as a bull bar, making it a better buy/buy below than a strong sell.
- Bears will argue their first leg was so strong they need another leg for symmetry. But with two strong failed breakouts below the lows the best they get now is a trading range.
- Maybe sellers above the second leg. But they will need to be quick to exit and now scale into that trade, I think. Because a measured move up is the highs of the range.
- I think we flipped back to always being in long now—wedge bottom and bull microchannel—so it will likely break out and need a second leg sideways to up.
- Bears do not have time on their side so they would need consecutive bear bars next week closing below the MA to change my view.
- Always in long, so expect sideways to up next week.
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