FTSE – Correction should provide fresh opportunity to sell
Weekly: A sequence of weekly lower lows and highs has been posted. Levels close to the 61.8% pullback level of 7219 found buyers. A higher correction is expected. We have a 38.2% Fibonacci pullback level of 7480 from 7904 to 7219. Preferred trade is to sell into rallies.
Daily: The medium-term bias remains bearish. Although we remain bearish overall, a correction is possible without impacting the trend lower. We look for a retest of the break out level to initiate selling. News events could adversely affect the short-term technical picture. Expect trading to remain mixed and volatile.
Intraday: Broken out of the wedge formation to the upside. Bullish divergence can be seen on the 4-hour chart (the chart makes a lower low while the oscillator makes a higher low), often a signal of exhausted bearish momentum, or at least a correction higher. Our expectation now is for this swing higher to continue towards the top of the trend channel, to complete a correction before sellers return. Ongoing Brexit negotiations could impact the index either way.
Action: We look to sell at 7480
Targets: 7225 & 7000
UPDATE: The move to 7480 triggered our short trade. (21/09/2018 – 14:46:00)
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