Bottom line: FTSE bearish structure remains intact as the indice reverses sharply from 7450 levels earlier. With 7200 support also taken out, FTSE is a classic sell on rallies case with 7450 intact.
Technical Analysis:
FTSE bears are firmly in control after reversing from 7447 highs print on November 27, 2019, and are looking poised to push lower towards 6560 as Wave 3 progresses. The short term wave structure reveals that a lower degree Wave 3 in into progress since 7447 highs, potential Wave 2 termination. Furthermore, Wave I within 3 could be now in place at 7130 since it looks like an impulse on smaller time frame. Also note that immediate price support at 7200 has also been taken out during the recent drop, indicating bears in total control. A corrective pullback is expected to unfold and it should remain well capped below 7447 highs, if the above discussed wave structure holds well. Ideally, the lower degree wave ii is expected to terminate around 7340/50 levels, before resuming lower again as wave iii of 3 unfolds. Please note that the next leg lower should be sharp and quick as it would be a iii rd of 3 rd of (3) rd wave (multiple degrees). Looking at the medium term wave structure since the 7900 highs, Wave (1) and (2) seems to be in place at 6539 and 7700 levels respectively. Also note that Waves 1 and 2 within Wave (3) are also in place at 7034 and 7447 levels respectively, as Wave 2 unfolded as an expanded flat a-b-c labelled here. This leaves us with a high probable trade direction on the south side, against 7447, and potential target below 6550, going further. The current counter trend rally should be seen as another opportunity to initiate short positions.
Prepared by
Harsh Japee, Technical Analyst
FTSE Chart
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