After epic zone boundary battles the FTSE breaks free.
Nb. Our comment from 06/03/19
As we said in our last comment on the FTSE back on the 22nd May the defining moment for this expiry we believe will be if the bottom boundary of the zone holds.
On the 29th May the intraday low was 7151.37, before the market managed to close 34-points higher, but was strike one.
Strike two came on Friday 31st May when the intraday low was 7130.85, but the close at 7161.71 was a very hard-fought battle, making it even more impressive to hold in its zone.
This support holding has certainly been helped by the ratio below the zone moving up to R1, but don’t forget this index was born into R3 ratio on the first day of this expiry with the open of 7348.62, and it is also now on strike three.
If Friday was tough then the next time it goes there will be even tougher.
The ratio below the zone may have risen, but it is still the same all the way down to 6950, so if the bottom boundary does crack, then that’s a lot of points before the next level of support.
So, 7150 is really a very critical level, still.
Range: 7150 to 7250
Type: On balance definitely bearish
Nb. Our comment on 06/10/19
The start of last week was all about the bottom boundary of the zone, 7150.
And it was a tough hold, with three very serious tests with intraday lows of 7130.85, then 7079.71 and 7138.14 on Friday 31st May, Monday 3rd and Tuesday 4th June.
But on each occasion the market closed back in its zone in a very impressive display of dynamic delta support.
With the bottom boundary holding the target was the top boundary, so on Wednesday the intraday high was 7259.24 marking the inevitable.
And, although it has been above the zone this expiry, the battle the market had with the upper boundary on Thursday was as epic as the one with the lower one, and basically lasted all day.
The fact the market closed at 7259.85, just above the boundary at 7250, meant Friday was always about being back above the zone.
This means 7450 is a distinct possibility as it gears up towards the rollover next week.
With two weeks still to go there is plenty of life left in this expiry.