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FTSE 100 Big Bear Breakout of Inside Bar at MA

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Market Overview: FTSE 100 Futures

The FTSE futures market moved down last week with a FTSE 100 big bear breakout of an inside bar. We are at a 50% pullback of the prior bull leg sitting on the moving average (MA) and at the prior high of the 18-month trading range. We might need to go sideways here while traders decide on the next move. It is a sell signal for next week, but it is lower down in the range. And it is a big bull bar, so not a great buy either.

FTSE 100 Futures

The Weekly FTSE chart

FTSE 100 Big Bear Breakout of an Inside Bar at the MA
FTSE 100 Bear Breakout of an Inside Bar at the MA
  • The FTSE 100 futures was a bear breakout, a big bear bar closing below its midpoint with tails above and below.
  • It is the 5th consecutive bear bar and the second leg.
  • We broke strongly below last week’s bear bar, so we are likely always in short. Most traders should be short or flat.
  • We just closed an open bull gap from March with the tail but did not close the body gap.
  • Gaps closing are a sign of trading range price action or the end of a trend.
  • The bulls see an 18-month trading range breakout, a higher high, and a deep pullback to 50% of that leg. They see it as a lower high and this second leg having two legs.
  • The leg up from March was strong enough to expect a second leg, but it hasn’t started yet.
  • But 5 bear bars are disappointing, so we can expect sellers above at the April high and maybe even beforehand.
  • Bulls will scale in above the next bull bar and likely get out at the midpoint of the two entries or the Low 1 on April 17th.
  • The bears see a failed breakout above the trading range and now a lower high. It is possibly a head and shoulders top, and we just printed the right shoulder.
  • An Head & Shoulders top (HST) is also a Lower High Major Trend Reversal (LH MTR). Traders will expect two legs sideways to down if that is the case. We are likely in the second leg.
  • Most of the bar is below the moving average, so likely sellers are above.
  • Bulls want a bull bar next week to buy above, a High 2 and a reasonable long swing entry at the MA in a bull trend.
  • Because this bar is larger than the others, it is a type of climax, and some traders will expect profit-taking. Bears need follow-through, a measured move down from the lower high.
  • The prior week was a doji, so a bad sell signal. We might go up early next week to let those trapped traders out before moving down.
  • March 20th was a reasonable bar to sell above in a bear spike, and they got trapped, so we expected buying at that high.
  • Also, remember the prior week was an inside bar, so breakouts of inside bars have a high failure rate. Likely, we pull back to the low.
  • It was reasonable for bulls to buy at the MA, so we should get back there to let them out.
  • Expect sideways to down next week, with a pullback of the bear breakout

The Daily FTSE chart

FTSE 100 Bull Outside Bar, Open Bear Gaps Above
FTSE 100 Bull Outside Bar, Open Bear Gaps Above
  • The FTSE 100 futures was a bull outside bar on Friday which failed to close above Thursday.
  • Tuesday was also an outside up bar, but it closed below, so there is resistance underneath that bar.
  • Bears will sell the midpoint of Wednesday’s big climax bar and the middle of the open gap. It is a bear breakout on a higher timeframe.
  • We expected the market to test the price on March 22nd as it was a double top (DT) bear flag that failed and trapped bears. The bull leg was strong, but it was just a test of the bear BO point above – a lower high.
  • We are in the middle of the range, so the probability is likely 50% for either direction and we will likely enter a limit-order environment next week.
  • The bulls see a two-legged pullback after a strong leg up. They want a second leg symmetrical to the first.
  • But the pullback has too many bars now. An endless pullback, disappointment and trading range price action.
  • The bears see the wedge bottom reversal failed, and we broke below – they want a measured move down – back to the inside bar that set off the initial bull leg.
  • Consecutive bear bars close below the MA – so we are likely always in short and STC. Traders will expect a second leg – maybe even two legs down because of the surprising strength.
  • The bulls want it to be a sell climax and reversal, maybe a micro DB on the daily chart.
  • But the bears have two open gaps now, which might keep us heading down to support.
  • Expect sideways to down next week.

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