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The general stagnation of the index remains, however, and only a break above 6920 will open the door to a new phase of upside dynamism.
I repeat my long-term chart of the FTSE today, but with a few add-on time angles to emphasise the repetitive nature of the patterns. It can be clearly seen on the chart that the major advances and declines over the past 20 years were fulfilled at a very similar rate. The rate of decline drawn from last year’s high is, at this stage, just for effect. It is worth reminding ourselves too that, in the Gann theory, a triple-top is amongst the most influential of all chart patterns. Should the index fall sharply from 6920 – the level that measures a 100% rise from the major low in March 2009 – there is no doubt a long-term triple-top will have formed. This is one of the prime reasons behind my caution over the past three months.
Nonetheless, major resistance levels are there to be broken. Any break above 6920 would clear the way for a major new upside advance, and we should prepare our trading strategy for any such outcome.
Recommendation: stay short, or sell on any further rise to 6920. Target 6293. Stop-losses remain unchanged and triggered only on momentum above 6975.