Although the FTSE 100 missed my long-term target of 6922 by just 46 points, the decision to jump ship in late 2013 has at least been justified. Sometimes it pays not to be too cute. The FTSE is now heading lower.
The writing was on the wall for equities throughout much of January. Despite the complacent attitudes that prevailed among trend-followers, share markets were hesitating to move higher, and some choppy trading days began to emerge. The inability to break above my solitary resistance line at 6775 was the telling moment, and a triple-top has now developed around this level.
The FTSE is likely to find its first line of support at my former target band 6491-6556, the top parameter of this band being a line representing a 100% advance from the major low in March 2003. Traders may look to take advantage of this likely bounce. Ultimately, however, lower levels are likely.
I have added three new lines on today’s chart, all emanating from the recent high. They represent falls of 6.25%, 8.33% and 12.5% respectively. I will be looking for one of these percentages to become my new downside target. An 8.33% fall would take the index down to a level of 6293 and align itself with the rising 3x2 daily time-angle that originates from the unique low in March 2009.
Recommendation: sell short on an imminent rally back to 6620. The target then becomes 6293.