FTSE 100: Mixed Signals

Share On Facebook

Sometimes the analysis is not strong enough to suggest the market will move up or down. We are in this situation with regard to the FTSE 100.

© Image copyright tjeerd

There are two ways to interpret the Elliott wave pattern, either the FTSE is in the midst of a decline to 7400 or it is at the start of a rally to 8000. Take a look at this chart:

 

The decline since May is a correction in three waves [W,X,Y] which is wave (B). The question is about wave (B), did this move end at 7477 which is the recent low?

To answer this question we need to identifies where wave X ended. If wave X was the rally in three waves [a,b,c (circle)] ending at 7790, wave (B) is not yet complete. In this scenario wave a (circle) was the rising wedge in July. This is because we are in wave Y and this wave will be in three waves [a,b,c (circle)]. If wave X ended at 7790 the low at 7477 is the bottom of wave a (circle) inside wave Y, the current rebound is wave b (circle). The next move is wave c (circle) to 7400.

In the alternate wave count on the chart below, we have a bullish scenario if we assume that wave X ended at 7783:

 

In this scenario wave X was the rising wedge ending at 7783, wave Y is an expanded flat [a,b,c (circle)] ending at 7477. In the expanded flat pattern wave b (circle) will end above the top of wave a (circle) which is what we have here. This means wave (B) is complete and the FTSE will rally.

Because of the conflicting signals there is not enough evidence to suggest buying the FTSE at current levels, unless you trade intraday.

Thierry Laduguie is Trading Strategist at www.e-yield.com

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20191016 19:50:36