FTSE and DAX Ratio Table 1st August 2018
It is just staggering that it has been 12 trading days since we covered the FTSE so a lot has obviously changed since the 16th July.
And more about that soon but first the one constant has been 7750, this has been R1 throughout, and as one can see from the price action it was as potent yesterday as it was on the 24th July.
Back then this index got as high as 7740.64, which is close enough, but even more so as it was at the end of an 85-point rally, and then reinforced by the fact it has taken until yesterday to retest it.
Back to the changes and the most important is the rise in the zone, which has been backed up by the rise in the ratios underneath it.
The fact this index hasn’t yet tested its zones bottom boundary and Monday’s low was 7700.85, the upper boundary, tells us that the bulls are on top, just not yet confident enough to really attack even R1, and we thought this would in the end mean resorting to cheating, or using the auction in other words, as it was stuck around 7750 for so long.
Ironically it did manage to break up through it on the back of Wall St. and it was the auction that took it back down to it.
Nevertheless, once you know that 7750 is R1, which generates futures selling, then this sort of tussle makes perfect sense.
Range: 7650 to 7750 or 7750 to 7800
Type: On balance bearish
It has been the same for the DAX, it being just over two weeks ago since we last published.
Therefore, it should be no surprise that there have been a lot of changes here too, but the only one that is similar is the jump in the zone.
Unfortunately, unlike a static R1 in the FTSE, here in the DAX, on our last view, we saw this index’s ratios jump from Y2 straight up to R2 at 12800.
Looking at the table above now then we see R1 starts at 12850 and R2 at 12950, so there has been a considerable falling off, we just don’t know exactly when of course.
However, the high on Friday was 12886, Monday 12848 and of course we can’t ignore yesterdays which was 12860, which suggests it had been by Friday at least.
The ratios below the zone here have also risen, but nowhere near so dramatically, and despite these two bullish signs activity is neutral.
The real issue is that despite this strength below and weakness above in the ratios, what hasn’t changed is that overall there is still far more depth of ratio above the zone than below it, which means the downside risk is far greater.
It is also worth noting that this index, like London, is already challenging the R ratios, and here the corresponding ones don’t appear until 12150, which is a long way away.
Range: 12550 to 12850 or 12850 to 12950