Market Overview: FTSE 100 Futures
FTSE 100 futures pulled back lower last week with a big bear bar hitting a bear swing target. There has been a strong bull breakout from the lows of a bull channel, and we are near the top of it. We don’t have to reverse here, but some bulls will need to reduce their position size and create a higher low for a possible next move. The bears want to close the breakout gap below to keep the trading range confusion going.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures pulled back lower last week with a big bear bar hitting a bear swing target.
- The bar has a small tail below, which weakens the case for bears to sell below.
- It is the second consecutive bear bar after a strong bull spike, so it is a pullback.
- The bulls see a strong breakout and follow-through and a large profit-taking bar. Most traders would look to reduce their position size, and moving the stop under a bear doji is an easy way to do that.
- Some bulls waited for the follow-through bull bar before buying, so all got 2:1 on their buy.
- The bears see a broad bull channel and a break above a trading range. After so many months of sideways, they expected the breakout gap to close, but they were disappointed in April with the weak Low 2 short at the high of the range.
- After they gave up and both bulls and bears bought, they are looking to trade again.
- Some aggressive bears sold the week prior and held for a swing down.
- The bulls want a second leg sideways to buy again for a high-probability second leg up.
- But the MA is far away, so it might have to go sideways to create a range and then measured-move that range.
- The bears might sell above that bear bar, betting on a scalp down.
- We are always in long, so it is better to be long or flat.
- In the bull microchannel and at the micro gap, there will likely be bulls below the lows of the past two bull bars.
- Can bears close the breakout gap? If they cannot, then the bulls likely have a much longer measured move target above.
- Expect sideways to down next week.
The Daily FTSE chart
- The FTSE 100 futures went lower on Friday with a big bear doji with a large tail below it.
- The bar is mostly tail and mostly above the moving average, so some computers will see it as a bull bar.
- The bulls see a tight bull channel, 3 pushes up and a breakout above a wedge top and measured move up.
- They hit the target, and we started to go sideways.
- There is only a 25% chance of a bull breakout above a bull channel, and this one worked and then failed in 5 bars. Typically, we test the other side of the channel, which we did on Friday.
- It is the first touch of the MA, so buyers here are likely.
- Its not a good sell below and not a great buy above, so we will probably go sideways here.
- On a lower time frame it is a wedge bottom and bears want to break below it.
- But the first reversal down after such a strong bull trend is likely to be minor.
- The first tatrgte for the bears is the bottom of the last buy climax and the top of the wedge that failed.
- But it’s tricky to sell now; a High 2, even if it is weak here, would be a great buy signal for the bulls.
- Are we always in short? I don’t think so. Trading range, yes. Pullback in a bull trend, yes. But there is nothing to sell here. I would consider selling if there was a three-legged move higher, failing at a test of the highs.
- Expect sideways to up next week.
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