Market Overview: FTSE 100 Futures
FTSE 100 futures went higher last week with a breakout and a pullback, creating a small gap. The pattern is fractal, doing the same thing on the lower timeframe, the daily chart. Traders are deciding if we are swinging up or down. Because bears and bulls are still in, scalpers can make money in this triangle. The benefit of the doubt should be on the bulls because we are respecting the HTF trendline and above the MA but the bears have stronger bars.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures went higher last week with a breakout pullback to the MA, creating a small gap.
- The bar is a small, bearish inside bar closing near its high. Some computers see it as a bull bar because of the close.
- The gap is a body gap, sometimes called a negative gap, which some computers use because it appears on a line chart (which uses candle bodies.)
- Inside bars are less reliable for breakout continuation. They are a triangle on a lower time frame. The market often tests both sides of the inside bar before continuing.
- Bulls see the breakout pullback off the long-term trendline and want this to be a higher low major trend reversal.
- But the bar is forcing traders to buy at the MA, which is typically a weak area to enter. The MA is a magnet that can vacuum price towards it, where traders exit the trade.
- The bears see a lower-high setup but haven’t got the bear bar they need. They have a slight advantage, with two good bear bars closing on their lows below the MA.
- That is an always-in-short signal, and this could be a pullback from that.
- Thoe bears expect a second leg. They might have had it with the doji so it is breakout mode.
- We have been saying it is breakout mode for many weeks, and most traders should be flat. This is because very few of the stop-entry trades worked, and none had a good trader’s equation.
- That means I am taking a 50% probability trade with a less than 1:1 risk reward. Most traders cannot do that consistently.
- It is a triangle still, so bulls and bears swinging are still in the trade.
- Some traders will see it as a bull trap because you can enter at the same price as before but with less risk. Getting less risk, a better price and better probability is rare – someone else would have to take the other side of it.
- Expect sideways next week still. The bull buy signal was weak (big tail above) so this leg will likely not go far. That means the pain trade will be up. If the bulls get a small pullback bull trend from here it can go far.
The Daily FTSE chart
- The FTSE 100 futures was a small doji on Friday – actually, a week of dojis, so it is breakout mode.
- If you look up a timeframe (a good strategy in a TTR) you can see the same pattern. breakout bar, inside bar. It is a pause.
- Traders are deciding if the next move is up or down. But without seeing the orders above and below, most traders should be flat
- The bull swing we called a few weeks ago is still in profit. It was a weak signal bar which got a good breakout. That is a surprise and typically has a second leg.
- But because it was a low probability signal bar, I suspect traders will not exit until it reaches 3:1.
- The bulls see a bull channel, and we are near the lows. But it is overlapping so traders are not buying the close or the highs they are buying pullbacks.
- Bears see a possible wedge bear flag and want a good signal bar for a double top and test of the range lows. But the buying pressure is consistent. So they are not willing to swing here.
- Overlapping bars mean you are waiting for information. That means a trading range, and unless you are confident with limit orders, it is typically a good place to lose money, not make it.
- It is two bull bars above the MA so it is the minimum needed to be always in long, but expect a pullback next week before a clearer signal. Until the weekly timeframe gets a decent bar it is probably best to wait.
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