FTSE might remain in control of bears as long as prices stay below 6300/50 interim resistance over the near term. The indice had dropped through 5780 levels last week, before pulling back higher again. Bears might be inclined to target below 5575 mark in the next few weeks.
FTSE probable wave counts are as follows: The indice had earlier carved a potential top around 6500 mark. Since then, the indice has broadly remained in control of bears and carved a series of lower lows and lower highs through 5780 levels.
The initial drop between 6500 and 5931 was in 5 waves hence impulse, labelled as Wave 1. As discussed earlier, an impulse is usually followed by a correction. The subsequent rally towards 6300/10 was in 3 waves a-b-c, labelled as potential Wave 2.
Also note that Wave 2 had reached up to fibonacci 0.618 retracement of the drop between 6500 through 5931 levels. If the above structure is correct, FTSE should ideally stay below 6300/50 levels and continue pushing lower toward 5575 and further.
The entire structure is not seen on the chart presented here but potential remains for a continued push below 4700 levels over the next several weeks. Having said that, corrective rallies could be seen as opportunities to be sold against 6300/50 mark.
Traders might be prepared to hold short positions and also look to sell on rallies towards 6050 levels. Protective stops might stay above 6350 levels at least, and projected target towards 5575 and below.
Technical Analysis Team
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