Nb. Our comment on 29/07/24
Just to keep us on our toes, the zone hasn’t moved to 7950-8050 as we thought it might last week, but has fallen to 8100-8200 instead.
This didn’t affect what happened at the start of last week, but very probably had an impact on what happened on Friday.
At the start of the week, it was indeed all about the bottom boundary of the zone at that time, 8150.
Monday saw the intraday low of 8155.72, whereas on the Tuesday it was 8151.46. That Tuesday test was truly spectacular, as it spiked down at 09:00, touched 8150 and promptly rebounded 80-points. Amazing really. However, as if that wasn’t enough, it retrenched all the way back down to 8150, touched it again at 15:00 before rallying into the close.
On the Wednesday, which was also strike three, we thought the dam would burst, but it recovered to close just above it and back in its zone.
Then on Thursday, the bears attacked again but, yet again, it recovered to close back inside its zone. This really set the field for Friday’s gains, helped no doubt by the upper boundary being no longer at 8250.
Looking at today’s ratio table, we rather doubt the fun is going to stop this week either.
Primarily because R1 now awaits this index at 8300. The question that we need to answer is whether or not the intraday high of 8290.33, coming at the end of a 100-point jump, was a test or not.
We have to go with yes it was, but this week should be more definitive, we are sure.
If the market can cope with the dynamic delta released by this level of ratio, and 8300 has only just crept above the threshold this week so this is entirely possible, then it might just fall to 8350 to provide the real test.
If the bulls can pass that test, then there is a huge jump in the ratios at 8450 and, don’t forget these ratio levels are exponential, that waits in ambush. Our preferred outcome is for it to wallow in the Y ratios of course.
Range: 8200 to 8300 / 8350
Activity: Average
Type: On balance bullish
www.hedgeratioanalysis.com
Nb. Our comment from 22/07/24
The settlement price for the FTSE July expiry was 8174.94, which was in a very weird trading day that was seriously affected by the worldwide IT outage.
Although, with the caveat of whether to trust the data under such circumstances, it seems the FTSE had a whopping trading range of almost 70-points during the expiry auction period, which was fun to watch but perhaps not to be part of.
In the end the July zone didn’t move to match August’s, but anywhere below 8200 was absolutely fine, being in the Y1 ratio bandwidth.
Furthermore, it was probably for the best that the July expiry ended last week, as 7800 was making a play to be the next zone.
So, in a rather bizarre twist, here we are in the August expiry, and the zone has held steady at 8200, meaning this trip starts off in its zone.
However, if you compare the ratios from a week earlier to today’s, you will clearly see the ratios above the zone have strengthened.
The most obvious is the appearance of R1 at 8350, but DR has also moved in a very considerable way.
Below the zone, it’s the exact opposite, with Y2 disappearing as has DR.
More to the point, we are seeing 7950-8050 making a move towards being the next zone.
All three aspects are bearish and, as it is all now Y1 from 8150 down to 7950, there is precious little support.
This means the current bottom boundary of the zone, 8150, will be crucial.
Our only concern, is what with all the problems on Friday, this may not be the correct reflection we are seeing, and it may take a day or so to sort out what might have been affected by last week’s outage.
Range: 7950 to 8150 or 8150 to 8250
Activity: Good
Type: Bullish
www.hedgeratioanalysis.com