Market Overview: FTSE 100 Futures
The FTSE futures market continued down last month with a big bear bar pause as traders expected after an August strong sell signal. The bulls want a moving average gap bar buy setup and the bears want another leg down. It’s a longer-term trendline break, so some traders will expect a test of the trendline before positioning for a longer-term move. Most traders should expect sideways to down trading next week.
FTSE 100 Futures
The Monthly FTSE chart
- The FTSE 100 futures was a big bear bar closing on its low last month so we might gap down on Monday.
- It is the second consecutive big bear bar closing on its low so we are always in short.
- We are pausing at the 100-month moving average (MA) which has been an area of interest for many years so we might go sideways here while traders decide.
- For the bulls it’s 2 legs sideways to down after a 2.5-year bull trend from the COVID lows.
- Traders expected a pullback so September could be a sell climax, a sell vacuum test of the lows where bulls step aside, knowing they can soon buy much lower.
- The bulls want a pause bar here and another buy signal like July. A second entry buy is a High 2 and a reasonable buy setup.
- The bulls want next month to close completely below the 20-month MA which would make a 20-bar moving average gap bar buy – a reasonable long entry in a bull trend.
- Traders have been paying above average for many months so a chance to buy at a discount will attract buyers. It will also be a magnet for bears to take profits.
- The bears see a strong second leg down after a trend line break and a lower low, possible major trend reversal.
- There are multiple tight trading ranges above so they wanted to break out and get a measured move down – they have been unable to close here since Jan 2021.
- The bears want either a big bull bar next month – too big for the bulls to risk to buy, or a small bull bar with a tail above – a bad buy signal.
- In the past 7 years on the chart, only 4 times have there been 3 monthly bear bars in a row, so even if next month trades lower, December should be a bull bar.
- It’s a trading range so stop entries have been rare on the monthly chart – last month being one of the few successful ones. More likely traders do the opposite – buy weakness and sell strength.
- It’s a sell signal, but at the bottom of a trading range, it is a low-probability sell. It’s also a big bar so the stop is far away so the risk is big. Bears want a bar like March 2020 and a collapse but are unlikely to get it at the bottom of a trading range.
- Bulls want a big reversal but after two consecutive big bear bars its a bad buy setup. It could form a more symmetrical inverse head and shoulders pattern – a cup and handle for a long-term buy – we will see over the next few months.
- Expect sideways to down next month as longer-term buyers start to consider entering the market.
The Weekly FTSE chart
- The FTSE 100 futures was a big bear bar closing on its low last week so we might gap down on Monday.
- It is the third consecutive big bear bar closing on its low so we are always in short. It is also a sell climax and might attract profit taking.
- We closed at the bottom of an 18-month trading range so we might go sideways here while traders decide.
- The bulls see a breakout test of the trading range. The past 5 times we traded strongly into this area price bounced away so it is not as bearish as it seems.
- The bulls see a trading range, a second leg sideways to down after a tight bull channel and a lower low. They see a possible wedge bottom, but without a buy signal yet.
- The bulls want a reversal week next week to set up a High 1 buy signal. Although 3 bear bars is a bad buy setup so a second entry has a higher probability.
- The bears hit their measured move target from the lower high last week and are now looking to hit the higher-high double-top measured move target.
- For the bears it’s always in long, but the stop is far away and a big risk so it might attract profit taking. Three consecutive bear bars are strong enough that traders will expect a second leg.
- But look left, June ended like September and it was the start of a 9-week bull channel. The bulls will probably need a double bottom on this timeframe before it does something similar.
- Bears want another leg down, which could form a parabolic wedge but for now, it looks like sideways to down next month as traders decide.
Market analysis reports archive
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