Bottom line: FTSE bearish structure remains intact until prices stay below 7724 mark, which is Wave (2) termination.
Technical Analysis:
FTSE goes the alternate route and unfolds an a-b-c expanded flat wave structure, carving a potential lower high at 7623 levels. This could be Wave 2 of (3) as discussed as an alternate probability earlier. Please note that bears would remain in control until prices stay below 7724 high, print on July 30, 2019 earlier. Looking at the entire wave structure since 7904 high in May 2018, FTSE has produced an impulse drop between 7904 and 6539, labelled as Wave (1). This was followed by a corrective rally between 6539 and 7724, which is marked by Wave (2). This is a 5-3 Elliott Wave Pattern, which suggests that another 5 waves could be expected towards the major direction which is down, in this case. If the above long term wave count holds well, prices should stay below the 7724 mark as Wave (3) progress lower, sub dividing into 5 waves. Furthermore, looking at the price action since 7724 highs, a potential Wave 1 unfolded between 7724 and 7034; while Wave 2 seems to be in place now at 7623 levels respectively. Please note that Wave 2 has unfolded into an expanded flat a-b-c and should this short term count hold true, prices will remain below 7724 going forward. We can expect a sharp drop as Wave 3 of (3) sub divides into 5 waves lower. A high probable trade direction from here is expected to be on the south side, against 7724, with potential targets below 6506 levels, as Wave (3) progresses. Watch out for a bearish reversal below 7724 to resume lower again, alternately a break higher would delay matters further. Resistance around 7904 could be re-tested in that case.
Prepared by
Harsh Japee, Technical Analyst
FTSE Chart
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