The Top 20 Differential and the 13-day BTI are no longer oversold, it’s possible we have a temporary bottom. It all depends on the Greek news. When there is important news the wave count is less relevant, the market will follow the news. The most accurate wave count occurs when there is no news. So today we have an important Eurozone meeting that will decide the future of Greece.
Given the low EUR/GBP and the fact that tour operators have slashed Greek holiday prices, I fancy a cheap and cheerful holiday in Greece this summer. If Greece exits the euro everything will suddenly become cheaper in Greece. We know that Greek banks are in trouble, people are withdrawing massive amounts of money. The ECB has been providing liquidity but it can’t continue for ever. Will the ECB pull the plug? That’s the risk. If Greek banks shut their doors the stock market will spiral out of control.
But today the stock market is rising on rumours a deal is imminent. There have been many instances in the past when a deal was imminent yet nothing has materialised. We’ll see later today.
The FTSE 100 is still in a support area below the 200-moving average, the timing indicators are near oversold. The logic suggests a rally from current levels but as I said when there is important news there is no logic.
On Friday the FTSE rallied to the 55-period moving average on the 90-min chart, this line is a resistance line. This trendline is currently at 6745 which is the main resistance. Today the index is rallying, I expect strong resistance around 6745. Now if the FTSE break above that level there is a second resistance level which is the 38.2% retracement at 6793. This would be the maximum retracement for wave iv (circle) because above that level we have the bottom of wave i (circle) at 6810 and if the current rally is a fourth wave, the rally will end below 6810 as a fourth wave cannot overlap the first. 