It was back in April the FTSE100 had its best of times. Market participants observed an all-time high of 7127 with further speculations of prices hitting new highs in the latter future. The speculations were logical, all the attributes lined up and things were very different back then.
The FTSE100 has dropped drastically this past few months. Factors such as the falling commodity prices, a potential interest rate hike in the States and a strong GBP have taken the FTSE100 back to 665X regions. Lows not seen since 2014. If the factors do hold, then this may be the start of something greater.
On the monthly time frame, Junes candle closed as a bearish engulfment. This erased the bullish gains from February to May. Prices closed above the 6500 monthly support which has held on numerous occasions. The indices currently reside below the monthly 20 SMA and the monthly pivot. A long term trader may simply be waiting for a solid monthly close below the 6500 support with targets of 6200. The was relevant support which was hit in both 2013 and 2014.
The weekly suggests a similar theme. We have another bearish engulfment forming on this week’s candle. The weekly trend defining level holds as 6800 and as long as prices keep below here, we may see a further decline back to the 6500 support. The weekly MACD has crossed to the downside and prices have breached the outer band of the 1 standard deviation Bollinger.
The daily time frame experienced a short term period of bulls, but this move was capped at the 6800 level. Prices have declined back below the weekly and monthly pivot once more. A 3 black crows bearish candlestick formation created from Tuesday – Thursday further suggests that once bears attain a breakdown below 6630, then next target will be the 6500 support.
Re-evaluating the technical, this is a bearish looking market on the daily timeframe.
- Prices are trading below the daily 20 SMA
- Prices are below the monthly pivot
- The MACD trades to the downside
We may simply see a correction back to the monthly pivotal regions or breakdown below the 6630 level. A daily close back above the 6800 invalidates this daily bearish view. Expect the falling commodity prices and a potential rate hike in the States to aid the monthly and weekly view on the FTSE100.
Intraday – Intraday the FTSE100 remains bearish. There have been lower highs and lower lows created. Prices have already corrected to the daily R1 which may be the new potential lower high. We may see a bearish move from this level with first a breach back below the daily pivot, followed by a further decline to the 6630 lows. Prices need to keep below 6715 for this bearish view to remain valid.
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