FTSE 100 Big Bear Surprise as Bulls Exit, Testing Swing Low

Market Overview: FTSE 100 Futures

The FTSE futures market moved lower with a big bear surprise last week as the Always-In bulls gave up and the bears started to short back to the moving average. The bulls see a pullback to move higher, and the bears want a failed breakout above the high of a trading range. The trend has been very strong, so more likely to continue after some movement sideways to down next week.

FTSE 100 Futures

The Weekly FTSE chart

• The FTSE 100 futures was a bear surprise bar closing near its low, so we might gap down on Monday.
• It is a 4-bar bear micro channel, so some traders might expect the first reversal to be minor.
• The bulls see a tight bull channel breaking above the all-time high (ATH).
• It has been nearly 20 bars since there was a bar closing below the 20-bar moving average, so the bulls will likely buy here.
• Either the first touch, the first close below or the first bar completely below the average are good candidates for a buy signal in a bull channel.
• The bears see 3 pushes up – so it’s a wedge top, and they were looking for a reversal below a good bear bar. It’s a kind of micro head and shoulders top.
• But a small bull bar was a bad sell signal last week. So we might need to come up and test the low of last week again.
• The bears want a continuation to sell down below the moving average. It’s a small gap above the prior high, and we did not close it. So it is not as bearish as it could be.
• Buying on Friday at the lows was strong, so we can expect more buying as we dip below. The bulls want to get a reasonable buy signal, a High 1 or a 2^nd entry High 2 buy around the prior high.
• This would create a breakout, follow through, and test to go higher.
• The bears are going to expect a 2^nd leg sideways to down after such a large bear surprise, and they might get it.
• Always in bulls exited below last week, which created this week’s bar.
• Expect sideways to down next week.

The Daily FTSE chart

• The FTSE 100 futures was a big bear surprise bar closing near its low so we might gap down on Monday.
• It is the largest bear bar we have seen in months.
• The move ended at a measured move from the pullback two weeks ago.
• Last week was the first time limit bears have made money in nearly 6 weeks.
• Last week was the first time stop-entry bears made money – so what kind of trend is it? A weak one.
• The bulls see gaps all the way up, and until they are closed, the bull trend is still intact. We stopped at a swing low, and the always-in bulls have stops below there, so they will likely defend it next week.
• The trend is transitioning into a broad bull channel, a kind of slanted trading range.
• The bulls see a pullback and breakout test of the prior ATH and a trading range breakout. Most trends do not reverse from bull to bear or bear to bull without going sideways.
• We might have started it already.
• The bears see a possible head and shoulders top and are looking for a further move down.
• It is also a 20-bar MA Gap Bar buy setup – the first time in over 20 bars to be completely below the moving average.
• But it’s a bear bar closing on its low, so some traders will wait for a better buy signal, like a bull bar closing above its midpoint before entering.
• Some limit bulls will enter, taking a chance that stop bears will not sell below the bar. They see it as a bear climax and a possible double-bottom buy setup.

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