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FTSE 100 Outside-Outside, Breakout Mode, Bull Channel

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Market Overview: FTSE 100 Futures

FTSE 100 futures went higher with a bull outside bar last month in an outside-outside pattern. Bears didn’t do enough to convince traders to get short, and now sideways to up is more likely. It might go up with two-legged pullbacks, but the bears could not make 1R selling below the bear bar.

FTSE 100 Futures

The Monthly FTSE chart

FTSE 100 Outside-Outside, Breakout Mode, Bull Channel
FTSE 100 Outside-Outside, Breakout Mode, Bull Channel
  • The FTSE 100 futures went higher with a bull outside bar last month.
  • It forms an outside-outside pattern and a breakout mode pattern. I’ve put the two possible measured moves on the chart.
  • The bulls see a bull channel and three legs up to a new all-time high.
  • Sometimes, the last leg of a three-push pattern is also a three-push pattern. So a duelling lines setup.
  • The bears see a breakout above a trading range with lots of two-sided trading.
  • The bulls maintained a good gap above the breakout point, which means there is a higher probability of a second leg up.
  • The bears tried to overlap but failed underneath that bull bar, which was a good buy signal in a microchannel with open gaps.
  • The bears did scalp above the inside bar, but the best they were hoping for was a trading range, so they exited their scalp.
  • It’s now a stop-entry buy above a bull bar in a bull channel. But it has one problem. The close is not above the high of the prior bar.
  • If we are in a channel, more bulls may be waiting for a pullback into the buy zone of the prior bar to enter.
  • Bears can argue that the outside bars had a bigger downside, and so there are bear scalpers around. But most traders should be looking to follow the uptrend.
  • Always in long, so traders should be long or flat.
  • Expect sideways to up next month.

The Weekly FTSE chart

FTSE 100 Three Consecutive Bull Bars, Expanding Triangle
FTSE 100 Three Consecutive Bull Bars, Expanding Triangle
  • The FTSE 100 futures went higher last week with a small bull bar with a fail above it.
  • For the bulls, it is always in long, so traders should be long or flat.
  • The bar was small, so some traders expect a volatility expansion next week.
  • It’s a bull channel with open breakout gaps below, so traders expected a second leg sideways to go up.
  • But it formed an expanding triangle. So bears could make money selling above bars, and bulls were buying lower.
  • Breakout mode can last much longer than traders think, so you should be careful trading with stop orders.
  • There is a small gap near the moving average, which could be an excellent buy zone. But with consecutive bars, we might not get back there.
  • If I had been short and saw three bull bars, its time to cover!
  • Bears need a good sell scalp above the high of that big bear bar.
  • But the bears got stuck. Some exited with 1R, and others are still short. It was a bad location for a sell (above the MA), so perhaps it will not act as a strong magnet.
  • You can see that once the prior week closed, traders bought it. If it is back to BTC (Buy The Close), buying and scaling in lower is the best approach.
  • Can the bears get another leg down? We went above the big bear bar and still closed near the high, so that means that the entry bar is disappointing for the bear. I would exit above if I were short.
  • Expect sideways to up next week.

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