Nb. Our comment from the 03/01/21
Respect to the bulls, as they could not have tried any harder.
By which we mean getting over DR at 6650 on Wednesday 24th Feb.
Sadly, it was almost too painful to watch, as is so often the case in these scenarios, that the market thinks it has done the hard part, but then every 50-points it is DR (or higher) repeated constantly.
Therefore, it was no real surprise to see it come a cropper at 6700, although it was also very resilient of those bulls to keep the close a smidgen above DR, at 6651.96.
Then you get to the amazing Friday, and the market misinformation that the open and high were the same as the previous days close, 6651.96, just obfuscates the picture, so shame on you, yet again.
In reality, the open was about 6573, so significantly below DR at 6650, and the subsequent rally and resultant intraday high of the day was about 6647, so another test of DR, not that the official O,H,L,C, want you to know that of course.
Although they couldn’t hide the solid test at the other end of the R2 bandwidth, as it battered on the door of its zone at 6550 for a good half hour.
The bulls did try to hold the line, and for quite a while, but to no avail.
For the astute among you, this test of 6550 would have been immediately recognised as strike 3, the first two tests having already taken place on the Monday and Tuesday.
This now makes the bottom of the zone, 6450, a really very important level.
So, and as you can see in the table above, it is worth noting that the ratio has gone up to R2.
Hopefully, it will now reside safely in its zone for the next fortnight, but if it doesn’t, then R2 shouldn’t hold that much fear (having been in it all last week), and as it has already tussled with DR, this would then now become a possibility.
Range: 6450 to 6550
Nb. Our comment on 03/08/21
Again, we have to applaud the bulls, as they are trying ever so hard.
Actually, it is a bit sad that they are in such an ebullient mood just at the very same time that the ratios are stacked against them.
Twice now (Wed & Fri) they have got past 6650, only to come a cropper at 6700, the next level of DR.
The problem is, this isn’t going to get any easier, as if they manage to force their way past 6700, they then have the daunting task of facing B1 at 6750.
And although 6800 is still in the B1 ratio bandwidth, as these levels are exponential, then this is something similar to B1 plus R3.
If they ever get that far, then the result might be that they will wish that they had in fact stayed in their zone.
Sadly, yet again, the misinformation propagated by the O, H, L, C data continues as on Thursday the high was never 6675.47, but rather a smidgen above 6650.
Anyway, the ratios haven’t actually changed, so this expiry is a perfect example for anyone to study how the ratios can actually affect the market.
We are not going to list how many times and for how long the FTSE engaged with one of our ratio levels and reacted last week (not enough room anyway), but between 6550, 6650 and 6700 there was more than ample opportunities for those that knew what ratio levels were there to see it.
Looking forward, as we now enter the last two weeks of this expiry, then things are only going to get more excitable, or at least, this is what normally happens.
And please don’t forget that this is the first “biggie” of the year, and as such all the naturally occurring derivative inspired increase in equity activity does also tend to get incorrectly labelled, especially by the press, who seem to need something more tangible to blame or accredit. But it does tend to get people nice and excited.
Range: 6550 to 6650 (6700)