London stocks slide post-holiday as global bond rout and Middle East strikes weigh
I’ve written and spoken at length about the H+S Top formed over Sep 2017 – Jan 2018. In Jan we started to test down to it and last month we fulfilled its Bearish Potential. To recap from my last commentary:
So what next? Well, as a guide I’ve pointed out above ‘X1’ (approximately 106.60) as a potential target for the first follow through of the Shoulder of the H+S Top and ‘X2’ approximately 106.30) as the finally target for the H+S Top. Both are very close together and I think that because of that the support would be doubled… and harder to achieve.’ .
As it turned out they weren’t that hard to achieve and we even had a decent follow through lower before once again utilising the old 61.8% Fibs at 106.55 and 106.68 as a support for an almost Descending Triangle Pattern.
This brings me nicely to the key feature of the Daily Chart above today…the Jan-to-date Downtrend (currently 107.56). This is a Three Pointer so it ought to be reasonable resistance as it has also been so in the past. The question is the testing of it.
If it breaks, then it is not the end of the Bearishness and the start of a Bull market…no! Overhead, we have to start with the wide Congestion Band 108.50 – 109.75. Then there’s the key 2016 50% Fib at 108.86 in the middle of the Congestion plus the old descending Neckline of the original H+S Top previously mentioned. If we carry on lower then we have an ominous whale of support approaching…the 2016-to-date Uptrend (currently 104.31). That may take some chewing if the market chooses to try to go through it.
Given all this…it is one to watch closely and for the moment given where we are and what the MAs are doing…I’ll keep the bullet point above fully Bearish.
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