FTSE Ratio update, zone still critical.

Nb. Our comment from 05/22/19

The FTSE is a classic example of the expiry of one month (May) leaving another (June) in a difficult position.

For May, where the zone was 7350-7450 at the end, it was a tremendous achievement for this index to claw itself all the way back up from R1 at 7150 (intraday and expiry low 7150.89 13^th May) to get to consecutive closes of 7353.51 and 7348.62 on the final two days. Well done.

The trouble, as is plain to see, that in June the zone was, and still is, 7150-7250.

And just to compound that, the ratio above it is already R3.

So, June has been born into a very high level of ratio.

No wonder it doesn’t know which way to turn.

Will it be necessary for this index to test DR at 7450, who knows?

As it stands, to us it doesn’t appear as if it has the bottle, as 7350 seems to be a tough hurdle, and this is only R3, which is what it’s in anyway.

It is not beyond the realms of possibility, but, as is also very plain to see, the ratios above the zone are far far greater than those below it.

Therefore, if it does, and 7550 is not impossible, as triples often go between the B ratios, or at least did a while back, we see this as only deferring the inevitable.

The real issue for us, in the five weeks that lie ahead in this expiry, is whether the bottom boundary of the zone will hold.

As, looking at it as it stands, the next ratio support level doesn’t kick in until 6950.

And, as this index is already ploughing through R3, then we doubt R2 will provide that much support.

The next few days should clear things up a great deal, but if we are to get a DR to DR expiry, and don’t forget May traded between the R ratios, you could be looking at a range of 600-points, which definitely deserves a wow wee.

Range:             7250  to  7450   

Activity:            Poor

Type:               On balance definitely bearish

Nb. Our comment on 06/03/19

As we said in our last comment on the FTSE back on the 22^nd May the defining moment for this expiry we believe will be if the bottom boundary of the zone holds.

On the 29^th May the intraday low was 7151.37, before the market managed to close 34-points higher, but was strike one.

Strike two came on Friday 31^st May when the intraday low was 7130.85, but the close at 7161.71 was a very hard-fought battle, making it even more impressive to hold in its zone.

This support holding has certainly been helped by the ratio below the zone moving up to R1, but don’t forget this index was born into R3 ratio on the first day of this expiry with the open of 7348.62, and it is also now on strike three.

If Friday was tough then the next time it goes there will be even tougher.

The ratio below the zone may have risen, but it is still the same all the way down to 6950, so if the bottom boundary does crack, then that’s a lot of points before the next level of support.

So, 7150 is really a very critical level, still.

Range:             7150  to  7250          

Activity:            Poor      

Type:                On balance definitely bearish