It’s all down to R2 now in the FTSE, so good luck…
Nb. Our comment from the 01/24/20
“So, 7550 remains “a massive level””, was our mantra from the Jan expiry, and guess what, it’s the same for the Feb one.
It is a terrible shame we didn’t publish on the 20th, as all the action in the FTSE so far this week would have made perfect sense.
Monday saw the intraday high of 7682.77, but ultimately the market closed right on their zone’s upper boundary after this test, at 7651.44.
We do bang on about the auction, but the real time close on the 20th was 7649.90, so, for us, that is a close exactly on the boundary, but still inside by a whisker.
Tuesday saw an intraday high of 7651.44 and an intraday low of 7550.47, which was not only a bandwidth test, but a zone bandwidth test.
Normally, these signal a breakout the next day.
However, the FTSE was too timid, or uncertain, and traded inside its zone with no further boundary tests, with the intraday high of 7637.35 and low of 7563.52.
Regardless of this indecision, a breakout was still the signal, which obviously came yesterday, with a bit of a nudge from the Street.
You can see the ratio levels in the table above, so no need to repeat them here, but it is perhaps worth reminding, that below the zone means the market is in bearish territory.
Which, to put it another way, means the bears are in control.
Range: 7450 to 7550
Type: On balance just fractionally bullish
Nb. Our comment on 01/31/20
It seems like the bears had one more battle, as on the very day of our last comment, the FTSE catapulted itself back into its zone, which to us means above 7550.
The official open was 7507.67, the previous days auction close, so not even the real time one, but to market practitioners, what we shall call, the tradable open, was more like 7564.
Same story really, just in reverse (as in the tradable open being below 7550), on the Monday, the day it closed down 173.93-points.
The Tuesday saw the FTSE test R1 at 7450 first thing, got a bloody nose, but felt confident enough to go back and camp out there for 90 minutes, before a benign Street helped it enough to get above it.
Wednesday, was also all about 7450, but this time it was acting as support.
Yesterday, we were back to the official open bearing no resemblance to the tradable one, but suffice it to say 7450 didn’t even get a look-in.
Today, we can see quite a few changes in the ratios, and very significantly, there is a lot more Y ratio about now.
Interestingly 7350 hasn’t changed, so is now also a very significant level.
But the real deciding factor may now well be R1 having now shifted from 7450 to 7400.
This is because the intraday low on Thursday was 7357.62, and that was at the end of a 126-point fall, we have no doubt or hesitation in calling that a test of R2.
If R2 can hold, and now R1 is not that far away, it could easily get back int the Y ratio.
Either way, it is now in a very narrow bandwidth, so it will have to decide one way or the other soon.