Market Overview: FTSE 100 Futures
The FTSE futures market had follow-through buying after a bear doji. The bears had a chance to sell strongly but could not prevent a second leg sideways to up. Even with a possible micro wedge, it is not a high probability trade to sell here. The bulls want a push to the previous high, but they might need a pullback and a High 1 or High 2 buy setup.
FTSE 100 Futures
The Weekly FTSE chart
- The FTSE 100 futures last week was a bull bar closing above its midpoint with a small tail above. It was follow-through buying for always in traders.
- For the bulls, it is a 6-bar bull micro channel, so traders will expect the first bar to go below a prior bar to be a buy signal. Traders might also expect the first reversal to be minor.
- The bulls want this to be a spike and channel bull trend. And with 3 big consecutive bull bars closing near their highs, it has a high probability of a second leg.
- The bulls need to get above the Sept 13th high, the 3rd lower high since the post-COVID rally. This would convince traders we are in a trading range and not a broad bear channel.
- The problem for the bulls is how dramatic the bear selloffs have been from these levels.
- The bears see a broad bear channel and a deep pullback with lower highs. They are looking for a second entry, a Low 2 to short below high in a trading range.
- But last week, the bulls got follow-through buying, and the weekly bear bar had a tail below, which means bears are not willing to swing short and buy back shorts instead.
- Limit bears will sell above highs, but most traders should be flat or long, waiting for a decent buy or sell signal.
- Trading ranges are full of disappointment, the bulls might get a buy climax bar next week and no follow-through or the bears will get another bear bar with a tail.
- For both sides, we are back above the moving average and in the centre of a 2-year range. On this timeframe, the probability is, at best, 50/50.
- Expect sideways to up next week.
The Daily FTSE chart
- The FTSE 100 futures was a bull bar, closing below its midpoint on Friday.
- It’s not a good buy, nor a great sell signal so expect more sideways to up next week.
- For the bulls, it was a High 2 on Friday but above a bear bar is a less reliable signal. We might need to test back down. They need stronger follow-through buying.
- If we test back down, that would also complete a possible wedge and a reasonable sell signal back to the moving average for the bears.
- The bulls see a tight bull channel and open gaps, so we are always in long. They want a break above the tight trading range price action right now and a measured move above the Sept 13th high.
- But the buying momentum has changed. Bulls are not buying new highs they are buying pullbacks below bars.
- The bears are selling below bars, and stop-entry traders are making money, so the bull trend is no longer that strong. A strong bull bar now is suspicious and could be a trap.
- The bears see a possible head and shoulders top, with the bull breakout being the left shoulder. Most traders should wait for a trend line break before attempting to sell the reversal down.
- With so many bars above the moving average, traders would expect more buying there. The bulls want to create a double-bottom bull flag to set up a measured move above.
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