Market Overview: FTSE 100 Futures
The FTSE futures market moved down strongly last week with a FTSE 100 bear surprise bar. It was a follow-through from the week before and pausing at the 100-Week MA. The bulls see a 50% pullback after a tight bull channel but we are back in the trading range. The bears want another leg sideways to down and they might get it. It has been a reasonable buy zone for a long time so likely sideways to down next week before reversing.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures on a big bear surprise bar closing near its low. We might gap down on Monday.
- It is two consecutive big bear bars, so we are always in short.
- It is also a 5-bar bear microchannel, so traders will expect a 2nd leg sideways to down. The first reversal should be minor.
- We are sitting at the 100-Week MA, which has been acting as support for the past few years. Traders that bought here before made money, so they may continue to do so.
- Most traders should wait to buy above a bull bar if one closes above its midpoint.
- The bulls see a 50% pullback of a very strong leg since October 2022. They want to see a High 1 or High 2 buy signal.
- The bear bar is so large it will attract profit-taking. It is so big that bear stops are far away, and it may be hard to structure a reasonable trade.
- The bears see a failed breakout above a several-year trading range and expected price to return here. They know 80% of breakouts fail.
- Some bears were trapped here in December 2022 – they sold the 2nd entry short and had to wait to sell more higher. They made money on their second entry and broke even on their first.
- If both stop entry bears and bulls and limit entry bears and bulls are making money – you are probably in a trading range, so BLSHS (Buy Low Sell High and Scalp) and take quick profits.
- There is no buy signal yet, so we are always short and will probably continue sideways to down as the market decides whether buyers or sellers are at the 100-Week MA.
- Because it was a bear surprise, most traders expect at least a small sideways move to down.
The Daily FTSE chart
- The FTSE 100 futures was a bearish outside down bar closing near its low so that we might gap down on Monday.
- It was a failed High 1 buy above last week. The move down was so tight it was a low-probability buy.
- The bulls see a 50% pullback, a test of the prior swing low and will look for a Micro DB or DB, High 2 buy setup to go long again.
- But the move is so surprising we might have to start going sideways and then look to move up.
- The bears see a bear surprise, a bear BO and follow through. It is climactic but might get another leg – possibly a parabolic wedge.
- The bears saw the wedge top and expected a 2 legged move sideways to down. We may have just finished the second leg.
- The bulls want a strong move up from the swing low. But it may need to get all the way back to the BO point from the start of the bull leg before it moves back up.
- Trading ranges have gaps that close – so we might need to go down to close them all.
- Most traders should be short or flat. The bears can get out above last week. The bulls should be waiting for a decent buy signal.
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