Investing.com UK - Financial Markets Worldwide
⚠ Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

FTSE 100: A Large Bounce Is Expected

ByThierry Laduguie
Published 16/12/2014, 07:59
UK100
-

Yesterday the FTSE 100 attempted to rally but the rally failed and the index made a new low. On the daily chart the decline from the top is unusual, it is in a straight line. It's a kind of mini crash and a taster before the real crash happens. This is not an easy market to trade because when the index is down by a large percentage in a short period of time the bounce will be equally large. So if you are thinking of going short you need a wide stop loss as the bounce will end in a wide range.

Note that the two timing indicators 13-day BTI and Top 20 Differential are deeply oversold, this is why the bounce will be large. The FTSE could rally to the 6400-6600 area by the end of December. In the short term however, the wave count suggests that the decline is not yet complete, so before the rally starts we could see another dip to 6100.

It is also possible that yesterday's low at 6182 marks the end of the decline. During a sharp decline driven by panic sometimes the fourth wave is so tiny that it does not look like a fourth wave. When the decline resume many people will think it is still the third wave down where in fact it's the fifth wave down. This could be the case here.

FTSE 100: 2 Hourly Chart

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.