Footsie Preparing To Tank (D)
Created on Wednesday, 22 April 2015 00:38
Written by Austin Galt
The Footsie has been trading as expected since the recent top on 16th April at 7119. I’ve been feeling in rhythm with this index so let’s see what the immediate short term expectations are to keep that rhythmic feeling going.
FOOTSIE DAILY CHART
We can see price dropped hard after the high day. I think that is minor wave 1 of the first wave down in a new bear trend.
The first rally in a new bear trend often makes a deep retracement and this time was no exception with price clipping the 88.6% Fibonacci level by a couple of points. Nice.
Since then price came back down and found support given by the PSAR indicator denoted by the dots. I expect this support to give way shortly.
This appears to be setting up a triangle consolidation pattern.
This all looks to be part of an ABCDE corrective pattern with today’s low the wave b low. I now expect a wave c high which may clip today’s high of 7092 but should be below the wave a high at 7105. It is possible that an ABC correction will be the end of the corrective phase but I personally favour the extra waves d and e to finish it off. Then the first wave 3 move down will be upon us which should see price start to tank.
The Stochastic and MACD indicators are both trending down with a bearish bias.
Minor confirmation of the downtrend will be breaking below the wave 1 low at 6979 while major confirmation will be breaking below the previous swing low at 6765 which is denoted by the horizontal line.
There are several resistance levels which I am monitoring. The first is the wave a high at 7105. The second is the all time high at 7119 while the third is the continuous contract high around 7127. Breaking above there and all bets are off.