Good morning Traders!
The end of a very busy week for Central Banks, saw sellers returning to many equity
markets across the globe. Today I am going to look at a potential setup that I am stalking
on the FTSE 100.
FTSE 100 – Time for a Rollover?
The FTSE 100, like many equity markets around the globe, enjoyed a strong buying
momentum, after the lows made at the beginning of October. But unlike many other
equity markets, the FTSE 100 for much of this year, has been stuck in a long term
channel, or in other words, the market was in a sideways.
The recent bullish move, from the lows set in October, went slightly higher then the
previous Weekly swing High, but not as high as the long term resistance level around the
7670 area.
On the Daily chart we can see the level of around 7420, serving as resistance on the way
up. After breaking this resistance level, the market then pulled back to test it from above,
and with strong buying momentum printing a bullish rejection candle for that day, and
moved on to print another Daily Higher High.
The market has then sold off to test that level from above again, and once more found
buyers at this level, however this time, they were unable to push the price higher, ending
up with a Lower high. With another test of this level yesterday, the market is showing
compression of price to the downside.
However, since price action is sitting at the top of the channel, and as the market pinged
higher the previous swing High on the Weekly chart, I’d expect a bit more of a fight
between the buyers and the sellers at this level, which is why in this case, I prefer a setup
of a level break and a retracement to show be that the buyers at this area are done, rather
then a compression and break.
Happy Trading!
