Nb. Our comment from the 06/01/21
Resilient or stubborn, difficult to tell really, but either way the inescapable truth is the FTSE desperately wants to go higher.
The problem is R3 at 7050 standing in its way.
In our last note we mentioned that this level was only just below the DR threshold, so although it hasn’t actually changed in classification, it has changed numerically, and is now just above the mid-point of the R3 range, rather than at the top.
Which is hardly very surprising, considering the absolute battering it has taken all week.
Literally every day the market tried to get past the dynamic delta at this point, and last Friday just typified the daily efforts, with at least three peaks running up to and just kissing 7050, before pulling back.
Not too sure why they don’t do their normal trick, which is to close in real time just below 7050 (or whatever is the problem level), then use the auction to get above it, which of course generally works as the futures market is closed when this auction takes place.
The U.S. take an entirely different approach, as they tend to use the opening gap up, as witnessed last Friday, which allowed them to get over Y2 at 4205.
Obviously 7050 is still key, but please note the other end of our trading range, R2 at 7000, which has seen two tests, with the intraday lows of 6998.19 and 7008.53 on Wed and Thu respectively.
So, one more would make that strike 3.
The other main point to make you aware of, is the appearance of some Y ratio below the zone.
As it is highlighted in the above table it is difficult to miss, but what may not be apparent at first glance, is that this bandwidth is a whopping 400-points wide.
Range: 7000 to 7050
Activity: Poor
Type: On balance bullish
Nb. Our comment on 06/07/21
As we said “the inescapable truth is the FTSE desperately wants to go higher”, and it didn’t hang about, charging out of the gate on the Tuesday, following the Bank Holiday.
Therefore, it was really quite sad that at that point DR was waiting to ambush it at 7100.
Sad, because having eventually broken past R3 at 7050, this next level was just 50-points above it.
And 7100 basically controlled, or constrained, pretty much all the activity on that Tuesday and Wednesday.
And if the first two days of last week were all about DR, then the last two days were all about its arch nemesis from the week before 7050.
Which actually means both levels are on strike two, but the pertinent bit is that DR has now moved from 7100 to 7150.
Which makes the $100 question; Does the market realise, or has the first two strikes done enough to make the market keen to avoid another tangle?
Therefore, another change in the ratios is that we have also lost R2 above the zone.
Meaning the R1 bandwidth is an impressive 200-points wide now.
There are still two weeks to go in this expiry, but at some stage the zone is also going to make its presence felt, although judging by the activity, we don’t see this market being at all patient.
Don’t forget it is a triple, and as such the numbers are just so significantly higher, that by achieving “moderate” this is in fact quite a decent level of activity.
Decent enough in fact, to cause all the changes to the above ratios.
Range: 7050 to 7150
Activity: Moderate
Type: Bearish
