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FTSE 100: Get Ready For A Trend Reversal

ByThierry Laduguie
Published 13/04/2015, 08:01
UK100
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The FTSE made a new all-time high above 7065 on Friday, the entire rally from the October 2014 low is nearing an end. Yet there is a lack of participation from the blue chips, the Top 20 Differential is lagging badly and is no way near overbought. The 13-day BTI is not overbought either, it seems the index has rallied out of thin air. What does that mean? It means the index is not as strong as it would appear to be.

When the big caps are not leading the charge, we should be cautious. Investors feel more optimistic about Greece, this has given the market a boost. But investors are in positive mood, in this situation they interpret bad news as good news. So today markets are rallying in Asia as investors shrug off downbeat Chinese trade data. Exports were sharply down underpinned by weak global demand. Investors hope China will add more stimulus to boost the economy, this is why markets are rallying.

The FTSE pushed to a new all-time high and the pattern is now in three waves from the bottom of wave 4. The index is above the upper line of the ending diagonal, the line is drawn from the highs on 21 November 2014 and 2 March. Get ready for a trend reversal.

FTSE 100: 120 minute chart

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