Nb. Our comment from the 07/25/2022
As the FTSE returns to its more usual Monday slot, there are a few interesting things going on.
The main one being this markets insistence on staying above its zone, and therefore in bullish territory. The real test was on Thursday when the intraday low was 7200.14, and the real time close was 7257.98. 7-points is nothing to the closing auction, so it could easily have finished back inside its zone, but it chose to turn a 6-point deficit on the day to a 6-point gain, closing at 7270.51 (after an extended auction as well).
The second interesting aspect is that above the zone there is 200-points of the minimal Y1 ratio, and yet here it is just 26-points above the upper boundary.
This seems a lot of effort and considerable expense to go to and not take advantage of this essentially open space.
Then there is the fact that Y2 above the zone has gone, and been replaced by R1, a considerable strengthening. And yet, R2 has slipped 100-point, from 7550 to 7650, and R3 has gone, a considerable weakening.
Luckily below the zone it is a bit more conventional, but no mistake, above it is somewhat contradictory.
Finally, although the “type” of activity has come in as neutral, this is because as much money has been taken off the table on both sides. The interesting aspect of this is that this is when this 5-week expiry is just but days old, so really rather rare to see.
Now we are into the more normal 4-week timeline, things may start to become clearer but, in the absence of anything concrete, it is exactly as we said last week.
As it is above its zone the bulls have the edge, and it is clear all the way up to 7450 but, the upper boundary of the zone (7250) remains critical, and don’t lose sight of all that Y ratio below the zone as that makes the potential overall trading range for the next four weeks 7000 up to 7450. Enjoy.
Range: 7250 to 7450
Nb. Our comment on 08/08/22
Why waste time? Which is exactly the attitude of the FTSE at the moment.
Since our last comment, please see above, where we mentioned it had gone to a lot of effort to stay in bullish territory above its zone and that it was clear all the way up to 7450…it has just powered on up until it hit aforementioned 7450.
During the course of this journey, it has also moved the zone up.
This we see as a natural move, occasioned by the lack of ratio in that huge Y ratio bandwidth that was there a couple of weeks ago, rather than any great bullish manipulation.
To underline this point, below the zone, OK 7050 has gone from Y2 to R1, but otherwise R2, R3 and DR have all remained static.
Admittedly, above the zone, the ratios have slipped, but they were doing that two weeks ago, and anyway, with the huge move in this market this is by and large a natural by-product of this.
So, what next?
Well, 7450 is the new critical level. Now because it is the top boundary of the zone but, previously, it was because it was R1.
Don’t forget at the start of this expiry 7450 was Y2, then became R1, so this is it just retuning to where it came from.
However, the difference now to two weeks ago, is that Wednesday’s intraday high and close was 7445, Thursday’s close was 7448 and Friday’s 7439. All inside the zone.
There is still two weeks to go, but the market is certainly not as aggressive as it was a fortnight ago. There is still some upside, R1 now starting at 7550, but there is also now a lot of downside. Apart from the actual zone of course, the corresponding R1 is all the way down there at 7050, so the risk: reward ratio has changed considerably now, at least for us that is.
Range: 7350 to 7450