Nb. Our comment from 05/17/19 (Not published online)
Nb. Our comment on 05/22/19
The FTSE is a classic example of the
expiry of one month (May) leaving another (June) in a difficult position.
For May, where the zone was 7350-7450 at
the end, it was a tremendous achievement for this index to claw itself all the
way back up from R1 at 7150 (intraday and expiry low 7150.89 13th
May) to get to consecutive closes of 7353.51 and 7348.62 on the final two days.
The trouble, as is plain to see, that in
June the zone was, and still is, 7150-7250.
And just to compound that, the ratio
above it is already R3.
So, June has been born into a very high
level of ratio.
No wonder it doesn’t know which way to
Will it be necessary for this index to
test DR at 7450, who knows?
As it stands, to us it doesn’t appear as
if it has the bottle, as 7350 seems to be a tough hurdle, and this is only R3,
which is what it’s in anyway.
It is not beyond the realms of
possibility, but, as is also very plain to see, the ratios above the zone are
far far greater than those below it.
Therefore, if it does, and 7550 is not
impossible, as triples often go between the B ratios, or at least did a while
back, we see this as only deferring the inevitable.
The real issue for us, in the five weeks
that lie ahead in this expiry, is whether the bottom boundary of the zone will
As, looking at it as it stands, the next
ratio support level doesn’t kick in until 6950.
And, as this index is already ploughing
through R3, then we doubt R2 will provide that much support.
The next few days should clear things up a great deal, but if we are to get a DR to DR expiry, and don’t forget May traded between the R ratios, you could be looking at a range of 600-points, which definitely deserves a wow wee.