The FTSE 100 tested 5354.00 on Wednesday on heavy volume. Since this last leg down on the daily chart represents a break from the May 2 top at 5819.90 to this bottom, the better than average volume could be an indication that some stubborn investors have finally been convinced to exit their weakening long positions.

Recently, the FTSE 100 index formed an ABCD Fibonacci chart pattern on the 1440-minute. This pattern signaled a possible near-term break to 5358.42. Since this target was reached yesterday, the market may begin to retrace the last break from 5819.90 to 5354.00. Typically, the first retracement zone is the 50 percent to 61.8 percent area at 5589.00 to 5643.53.

Clearly, the main trend is down, but oversold conditions make the FTSE susceptible to a short-covering rally. If the market does begin to reverse to the upside then look for sellers to be waiting at 5589.00 to 5643.53 since the main trend is down. Traders have a few choices at this time. Those already short may try to ride out a possible retracement, some shorts may want to exit their positions and refresh on the retracement and aggressive traders may decide to take a counter-trend long position. All of these decision could mean the return of volatile trading conditions.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The sell-off in the FTSE 100 has the index on path to reach a short-term goal at 5358.42. This is just a mathematical projection; however, no one is certain if the downside momentum will continue to build in strength. If it does, then the index is likely to decline at an accelerated pace, making the market vulnerable to a more pronounced break.

Since reaching a short-term top on May 2 at 5819.90, the index has been under pressure. Fresh shorts and long liquidation has prevented even the slightest upside retracement, meaning traders have been willing to sell weakness without fear of getting caught in a short-covering rally. This line of thought may change if the FTSE can hold 5358.42.

At this time the FTSE has been adhering to the forecast set-forth by an ABCD Fibonacci pattern. If the downside target at 5358.42 is tested successfully then the index may retrace into a series of Fibonacci price levels. Traders should note that this retracement will in effect be a rally in a bear market and not a trend changing event. Furthermore, since the main trend is down and in the control of the short-sellers, the next rally is likely to be stopped by fresh shorting pressure.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The FTSE sold off sharply on Monday, keeping it on track for a test of the target projected by the ABCD Fibonacci pattern on the 240-minute chart at 5382.95. This particular pattern has set up two opportunities for traders. Firstly, trend traders are likely to continue to push this market lower until it reaches the target, and secondly, counter-trend traders may try to take advantage of a test of this level for a possible rally back into a series of Fibonacci retracements points.

Since the FTSE is nearing a potential short-term reversal price, traders have to be careful about getting caught in a bear-trap. This pattern occurs when bearish traders try to press the market lower by offering through the market, but when fresh sellers fail to chase the index lower, they begin to cover, trapping traders at low prices.  This type of move can be volatile, but not necessarily trend changing.

At this time the last main top is at 5586.80. A trade through this level will turn the main trend to up on the 240-minute chart. If the market reaches the target at 5382.95 and the index begins to retrace, then traders should look for a minimum rally to 5484.40 to 5508.57. A test of this zone could attract fresh selling pressure, however, a move through this zone will be the first sign that the market is starting to strengthen.

Trend traders should note that if the Fibonacci price target fails to hold as support then the FTSE may continue to fall until it reaches the December low at 5328.70, or the low that started the recent 90-day rally.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The FTSE closed lower for the week, but managed two solid days of gains after reaching a bottom on May 9 at 5464.40. Since the main trend is down on the daily and the intraday charts, one can assume that “a trend in motion is likely to remain in motion”. This means that we are likely to see a test of this low later this week and perhaps a little more.

This assessment of the chart pattern is backed by the creation of an ABCD Fibonacci chart pattern that has emerged on the 240-minute chart. This pattern suggests that the short-term swing created by the rally from 5464.40 to 5585.50, projects a continuation of the break to 5382.95. If this price level is reached as forecast, then we may see another short-covering rally to at least 5484.23 to 5508.13 over the near-term.

Although the swing chart and the Fibonacci pattern suggest the FTSE is likely to work lower over the short-run, short-traders should continue to keep their eye on the last top at 5585.50. A move through this level will reverse the trend to up on the 240-minute chart and negate the bearish intraday pattern.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The FTSE 100 closed higher on Thursday in what can best be described as a little profit-taking following a sharp sell-off. Without the formation of a solid support base, all rallies should be treated as short-covering. With an abundance of downside retracement zones still within striking distance, investors don’t appear to be too anxious to buy yet. They seem to be more willing to wait for stocks to reach a solid value area. Shorts, on the other hand, seem to be content with pressing the index lower while letting off the gas a little to trigger a less than meaningful short-covering rally. Rather than attempting to sell new lows, these traders appear to be happy with refreshing on minimal short-covering rallies.

Technically, the FTSE has formed a potentially bearish ABCD Fibonacci chart pattern. This pattern which can best be described as a “lightening bolt” pattern is considered the “backbone” of all Fibonacci patterns. This pattern is also price symmetrical because a previous break is used to forecast the next down move. In the case of the FTSE, this Fibonacci pattern is forecasting a possible break into 5358.52 over the near-term.

Thursday’s close at 5543.95 was below the retracement zone created by the rally from the December bottom to the March top. This zone at 5580.97 to 5658.90 should be considered new resistance. If the FTSE continues to work lower into the ABCD price target at 5358.52 then it will have to retrace into a potential support zone created by the August to March range. This possible downside target is 5390.05 to 5284.67. In summary, traders are likely to continue to press the short-side as long as 5580.97 to 5658.90 remains resistance.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The selling spree continued in the FTSE 100 on Wednesday with the index reaching a new low for the year at 5464.41. The sharp sell-off also penetrated the retracement zone created by the December bottom at 5328.70 to the March top at 5989.10. This area is 5658.90 to 5580.97. The weak close at 5530.05 has put the index in a position to challenge another retracement zone at 5532.15 to 5424.31.

Additional technical analysis has identified a key level at 5538.70. Since the index broke through this former support level, it is now short-term resistance. Although the measured downside target is 5412.04, the close has put this market in a position to regain 5538.70. A move through this level will mean that downside momentum is slowing and that the index may be poised for a short-covering rally.

If the market is bottoming then a support zone should form. Short-covering rallies tend to start with spike bottoms. Based on the break from 5989.10 to 5464.41, a strong rally could take this market to 5726.76 – 5788.67, but realistically the short-term target is 5642.16 to 5684.10. Since the main trend is down, rallies into either one of these potential resistance zones is likely to create shorting opportunities.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The FTSE 100 picked up where it left off on Friday with heavy selling pressure driving the market through the April 11 bottom at 5576.40 and the December 31 close at 5572.30. The first move through the April swing bottom reaffirmed the main downtrend and the break through last year’s close put the market lower for the year, wiping out this year’s gains.

Although the index may be oversold on a short-term basis and susceptible to volatile counter-trend moves, any buying is not likely to be strong enough to support the formation of a bottom at this time. In addition, the shorts have strong control over the market and appear to be ready and willing to refresh their positions on any short-covering rally.

Technically, buyers may be attracted to the FTSE at current levels since the index has entered a retracement zone created by the December bottom at 5328.70 to the March top at 5819.90. This 50 to 61.8 percent retracement zone is 5574.30 to 5516.34. To longer-term traders this may be the ideal area to initiate a new buying campaign. The one thing that traders can count on is volatility and whip-saw action since bullish longer-term traders will be searching for buying opportunities while bearish short-term traders will be looking for re-entry levels.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

It will be interesting to see how the FTSE 100 opens on Tuesday due to the volatility in the global markets on Monday. The global indices closed in a weak position on Friday so the lower opening to start the week did not come as a surprise. The turnaround in the U.S. markets may have been triggered by short-term oversold conditions or value-based buying, but some have to question whether those conditions will be met by the FTSE, meaning fresh selling pressure, or will the FTSE open flat to higher just like the U.S. equity markets closed. This uncertainty could lead to a volatile trade early in the session.

One key number to watch is the April 11 bottom at 5576.40. This price is slightly above the December 31 close at 5572.30. Taking out both of these levels may trigger sell-stops, but unless the fundamentals are overwhelmingly bearish, could trigger a “dead-cat” bounce or quick reversal. Bullish traders will try to defend last year’s close which could trap bearish traders who sell weakness through the previously mentioned bottoms. To some traders it doesn’t make sense to continue to sell weakness. These are the traders who may take profits if 5576.40 is taken out in the hopes of triggering a reversal up so they can refresh their short positions.

Counter-trend traders who saw the action in the U.S. markets on Monday may already be gearing  to play the upside because of the reversal bottoms. These traders shouldn’t be looking for more than a 2 to 3 day rally since the main trend is decisively lower. In addition, without a support base to build on, any short-covering rally is likely to be short-lived.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

The FTSE 100 started the week upbeat, but ended it by putting in a potentially bearish closing price reversal top. Based on the March top at 5989.10 to the April bottom at 5576.40, a major retracement zone was formed at 5782.75 to 5831.45. Last week’s top was at 5819.90, well above the 50 percent level but slightly below the 61.8 percent price. Since the main trend was down on the daily chart, the recent rally represented a standard correction in a bear market.

Elliott Wave traders should note that last week’s break helped confirm the last high of an ABCD Fibonacci pattern. This pattern suggests that the FTSE is set up for a possible break to 5358.19 over the near-term. If the market reaches this target price then it may retrace the projected break from 5819.90 to 5358.19 because of oversold conditions.

With a Fibonacci price target in place, the first action traders should be watching for this week is a follow-through to the downside to confirm last week’s closing price reversal top. A trade through 5639.80 will accomplish this. A second price level to watch is the April 14 bottom at 5576.40. A trade through this price will take out last month’s low and could trigger an acceleration to the downside. This could lead to additional selling pressure over time to the ABCD Fibonacci pattern’s target at 5358.19. This would be pretty close to the December 20 bottom at 5328.70 which started the entire 90 day rally.

Although there may be periodic counter-trend rallies due to short-term oversold conditions, last week’s action is strong evidence that investor sentiment has shifted to the downside. Rather than look for bargain prices to enter, investors are likely to be cautious about playing the long-side of the market.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.

Although the FTSE 100 posted a small gain on Thursday, traders appeared to approach the index with caution following the previous day’s sell-off. Having been burned a few times over the past two weeks as the index approached a major retracement zone at 5782.75 to 5831.45, I can see why traders may be a little shell-shocked to play the long side at current price levels.

Approaching the market from the short-side hasn’t been a picnic either as each hard sell-off has been met with solid buying. The periodic switching from upward bias to downside bias has given the market a sideways appearance. Looking at the index since it bottomed at 5576.40 in April, one can see a clearly defined rising wedge chart pattern however. The recent compression of prices inside of this wedge is indicating impending volatility. A bias to the downside has also developed, suggesting that the index is poised to break through support near 5736.00 over the near-term.

Since the short-term range is 5576.40 to 5819.90, traders should watch for a possible break into a retracement zone at 5698.15 to 5669.42. Adding further to the developing bearishness is the fact that the index is trading lower for the week. The formation of a closing price reversal top will be another sign that the selling is greater than the buying at current price levels. Another key price to watch on Friday is last week’s close at 5777.10. A close under this price today could fuel a sizeable break next week.

For further information on this and other Autochartist products, visit our website at www.autochartist.com.