Nb. Our comment on 06/12/23
Yet another really good week for the ratio watchers.
The “critical levels” we mentioned last week were the ones that dictated what happened last week, and straight from the off as well.
Monday 5th saw the intraday high of 7654.84, and it took quite a few hits but held firm.
Tuesday saw the intraday low of 7556.16, which also held firm.
Then Wednesday saw the intraday high of 7642.40, close enough but also, far enough away for one to see it knew what was waiting for it at 7650 and didn’t want to go there again.
Thursday was bit of a non-entity sort of day, especially for ratio watchers but, Friday more than made up for it, with three very distinct spikes down, one of which resulted in the intraday low of 7546.50.
Which brings us neatly round to the final week of this expiry this week.
First point, is that both boundaries are now on strike two.
Second point, the zone dropping to 7450-7550, that we mentioned last week, is still on the cards.
Both points make having any concrete views particularly difficult, as if the actual rollover and expiry of a triple witching expiry needed any further assistance in this department.
Best guess, is that as long as the zone stays where it is the market will have a huge job just to keep it in this for rollover Wednesday. After that, all gloves are off. The level to keep a very close eye on is 7550. As where things are now, it is the bottom boundary but, should the zone shift, it will become the top boundary. Suppose, the least likely scenario is that it will be quiet.
Range: 7550 to 7650
Activity: Very poor
Type: Not bearish
www.hedgeratioanalysis.com
Nb. Our comment from 06/05/23
Again, another good week for those if they had taken note of the ratio levels.
In the first instance, the fragility of 7550 that we suspected proved to be well founded.
On the first trading day back, post the Bank Holiday, Tuesday 30th May, the FTSE did bounce off 7550, and managed a small rally that lasted for about 20 minutes. However, that was all it could muster and it soon caved in once it got tested again, which really wasn’t a great surprise.
Then the Wednesday and Thursday saw the market attack R3 at 7450, in what we referred to last week as “a far more solid ratio level”. It certainly had its work cut out, as on the 31st the market tested it first thing in the morning and it then promptly rallied 65-points where it remained for most of the rest of the day before coming back for another bite right at the close.
Thursday 1st saw the market open up about at about 7478 (usual moan about the idiotic official open being the previous day’s close) and it wasn’t until the late afternoon that saw three spikes down to test it, with one resulting in the intraday low of 7445.30.
So, Friday’s rally was exactly what should have happened.
The other aspect to note is that the zone has moved, so this rally also took the market back into this.
We are now at the half way point of this expiry, so after this week we then get the rollover and expiry, so volatility could actually increase.
Also, there are signs that the zone could also move down again, to 7450-7550, so there is plenty of life left in these final two weeks and something we will have to keep a close eye on. Otherwise, if the zone remains static the market could just stay inside it if it wants a peaceful week, meaning that 7550 and 7650 are the critical levels to watch in the next few days.
Range: 7550 to 7650
Activity: Moderate
Type: Bullish
www.hedgeratioanalysis.com
