FTSE 100 Double Top in Trading Range or Pullback

Market Overview: FTSE 100 Futures

The FTSE futures market formed a FTSE 100 double top high in a trading range last week, or is it a pullback? The bulls had a tight bull channel, so they expected a second leg after a corrective move sideways to down. It is likely we will test the breakout point in November. Bulls want a bear trap and reversal for a breakout above. The bears want continuation for a sharp move back down into the middle of the range.

FTSE 100 Futures

The Weekly FTSE chart

• The FTSE 100 futures was a bear bar closing on its low, so we might gap down on Monday.
• It is two consecutive big bear bars so we are likely always in short.
• The bulls see a pullback after an 8-bar tight bull micro channel. It is a spike and likely to have a second leg sideways to up.
• The bulls see Nov 7^th as a target for the pullback as a prior breakout gap to reverse and continue higher.
• The bears see a strong sell signal high in a trading range, so a reasonable short. The bears want a second leg sideways to down, probably to the first pullback in the middle of the trading range.
• Last week’s bear bar wasn’t an ideal sell signal, so we might need to go back and test it before a second leg further down.
• This trading range has had sudden big moves, so although it is bearish, look left and see the corrections up are just as fast.
• Bulls will look to scale in at the moving average, seeing last week’s bar as bulls exiting and not as bears selling. They know some bears sold at Nov 7^th and are trapped.
• Bears will look to create a lower high than last week. They succeeded in preventing a higher swing point with Aug 19^th, so at least they have a trading range to convert into a deeper trend down.
• Most traders should be short or flat.

The Daily FTSE chart

• The FTSE 100 futures was a bear bar closing on its low, so we might gap down on Monday.
• It is the second consecutive bear bar – both big and both are closing on their lows, so we are always in short closing just above the 100-day moving average.
• The bulls see a small pullback bull trend from the low to the high of a trading range. Traders expected two legs sideways to down.
• It was more than 20 bars above the moving average, so traders expected to reach it and find buyers. But now we are breaking below.
• There was a double top on Dec 5^th, a bad sell signal, so once we hit the moving average, we tested that breakout point and continued down for another leg.
• The bears see a bigger double top with August 19^th. It was a second entry short signal after the bear bar on Dec 6^th. Most bears sold below that or waited for one more bar.
• The bulls want a spike and channel test down to the Nov 11^th or Nov 22^nd low. They have open gaps around here, so it is reasonable to test these swing points in a trading range.
• The bears might see a failed wedge bottom bull flag, with Friday breaking below. They would want a further measured move based on the measuring gap putting it down at that channel test.
• Trading ranges are full of disappointment, so we might do none of the above. Monday could reverse, creating a sell climax and trapping bears into a bad short. Bulls can get a second entry-long signal with Dec 13^th.
• Small pullback bull trends are likely to convert into trading ranges first.
• Most traders should be short or flat

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