FTSE technical analysis overview courtesy of cantor index

By Swen Lorenz 20 February 2013

2 mins. to read

FTSE DAILY

In the past couple of weeks the FTSE had posted some minor profit taking, orange lines. However the price action in recent days has lifted the index back to fresh multi year highs.

This recent move higher came out of the price action breaking out of the near term trading range, orange lines. The bulls would have hoped this was a traditional flag pattern giving considerable upside potential. Candlestick followers however will be slightly concerned that these recent higher highs were posted only on an intra-day basis, and this higher high was followed by a Bearish Engulfing candlestick pattern, and then followed by an Inside Day, Harami Cross, all signalling that the recent buying momentum may have run its course.

This negative argument also gains weight from the clear RSI divergence where the RSI has not posted a higher high. The index remains above the near term Moving Average, grey line, and above the near term trend line, blue line, so any weakness seen ahead would still be seen ‘only’ as profit taking and not seen as trigger to open short sales. Only a break under the near term trend line, and break of the 6225 lows would open up more negative near term targets.

So in summary the FTSE has posted some sharp moves higher from November, and seems to have moved into some natural consolidation areas. Possible take profits for the active, and we see traders keen to buy on any near term weakness to the 6225 support, only looking to turn out-right bearish on confirmed moves under 6225.

FTSE WEEKLY

Last updated, February 18th, 2013

The graph above is a great deal more detailed than usual, as I will be using this as an example at the Elliott Wave Seminar next week, as mentioned above this event is free to all readers, not just Cantor clients, so feel free to register if you would like to be run through the logic of this graph in more detail.

With Elliott Wave there often numerous potential counts, so the graph above is not THE count on the FTSE, just one potential count. This count suggest that the sell-off through the 2007-2008 was a 5,3,5, Zig Zag correction, and we currently are in Wave 5 of the following impulse. This count does offer up considerable upside targets, and does suggest that the FTSE is set for a strong H1, and is set to post a move up through its all time highs.