Bottom line: FTSE remains firmly under control of bears as it prints fresh lows at 4762 today. The drop might not be over yet but expect pullback rallies to materialize soon. .
Technical Analysis:
FTSE remains in control of bears since 7696 highs in January 2020. Looking into the immediate wave structure, FTSE might have complete of could be close to completing Wave 3 drop since 7696 earlier. Higher degree probable counts are labelled on the chart here to keep it simple but at a lower degree, Wave 3 might have completed at 4762, leaving room for further drop lower. Alternately, Wave 3 might have terminated at 5200 levels on March 16, 2020 and Wave 4 is unfolding as a triangle structure. We present the probable counts below since 7696 levels: The drop between 7696 through 6447 was Wave 1, followed by a sharp Wave 2 termination at 6879. Wave 3 might have terminated today at 4762. If the above counts are correct, a counter trend rally might be possible as Wave 4 unfolds. The fibonacci 0.382% of Wave 3 is seen around 5580 mark, an ideal for Wave 4 termination. It might be difficult to confirm at this point in time if Wave 4 rally is underway. FTSE might print a shallow low below 4762, before reversing higher. Please note that immediate resistance is seen at 5400 levels and a break higher is required to confirm that a bottom is in place. We can expect the counter trend rally to gather pace thereafter. It might be considered to take some profits on the short positions taken earlier and remain flat as a potential counter trend rally unfolds towards 5580 levels. Most traders might be willing to sell on rallies towards 5600 with a protective stop above 6450 and projected target below 4700 going forward.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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