Well as I promised I will be starting my weekly FTSE analysis again. It’s something that I should’ve been doing all the time I’ve been trading but it seems to have fallen by the wayside over recent months. Anyway I cannot change the past but I can learn from my mistakes to help shape my future. So here it is my FTSE 100 analysis for the past week. This will be a regular feature to my blog and it will go on at some point over the weekend every weekend. Except when I’m away.
FTSE 100 Analysis. Weekending 6 April 2012
Well I have to day I’m glad I started to do my FTSE weekly analysis again as looking at the chart below some interesting events are unfolding. With it being easter weekend the FTSE markets closed at the end of Thursday 5th April and it would seem we are in the middle of breaking through recent lows, making new lows along the way. This should be great news for the bears. However it’s not a bear market just yet, it could be a temporary dip.
If we look at the 20,50,200 Exponential moving average combination (blue, green & red lines on the chart) we can see that the 20 is clearly pointing down, the 50 is about to join the 20 in pointing down and the 200 day EMA is running out of steam. There have been no crossing of any of the moving averages yet but if the 20 crosses the 50 and then onto the 200 it could be the beginning of a retracement or a bear market. Since history can sometimes repeat itself if we look back to July/Aug last year we can see what happened when the 20 crossed the 50 and the 200 before. Price dropped significantly retracing well over 1000 points. Of course this doesn’t mean the same will happen again for sure but anything is possible.
Looking at the chart more recently price has touched the 6000 mark and has been retracing ever since. It could well be the case that the price is just a temporary dip after rising to 6000. The most recent low of 5700 is a support level with the congested price range that developed back in January providing the support. If this barrier is broken significantly then the next levels to look out for are 5600 and 5400, as always though where the FTSE goes no body knows.
Chart Copyright of SpreadCo ©2012
My FTSE outlook for the week ahead.
This week my outlook for the FTSE is bearish. There was a lot of volume when the FTSE fell dramatically on Wednesday and an increase in volume usually means the move will continue, even if for a small amount of time. Therefore when I look for trades this week I will be looking for opportunities to go short, whilst maintaining any open positions that I have.
That’s all for this week.