Nb. Our comment from the 08/30/2022
And too much for them it certainly was.
A very interesting thing also happened last Monday 22nd as the intraday high was in fact 7550.41 (the previous close and Monday’s open being 7550.37).
We never saw it, don’t think anyone did actually, but it’s there in black and white for all eternity despite it being an anomaly IOHO.
The warning signs were there, as on both Tuesday and Thursday the market got back up to the low/mid-thirties.
And we have said this often in the past, that when the market knows there is a huge futures seller at 7550 and then starts playing “you first”, “no, after you” and “please, I insist” but no one is being brave enough to knock on that door again, it’s always a bad sign. Great if you’re a bear though naturally.
Getting back to the present, and the significance of this market closing below 7450 should not be underestimated.
This is because the next level of support is in fact the zone, the upper boundary still being at 7350.
Of course, London is going to be playing catch-up as it was closed yesterday so still has to account for a chunk of Friday’s drop as well as Monday’s.
But, if the FTSE does test its zone, we will be happy to speculate that when we published our comment on the 22nd mentioning the zone at 7300, not many, if any, probably saw that as a likely target.
Means that our trading range is quite a significant one this time, as 7450 will be a big test for any bulls, whereas if the upper boundary at 7350 doesn’t hold then the lower boundary will very probably come into play.
Range: 7350 to 7450
Nb. Our comment on 09/05/22
We do sincerely hope that you did take notice of our ratio levels, as you should then have had an outstanding week.
In fact, everything we talked about actually played out in London on the very day the market reopened, Tuesday 30th August.
From the open it went on to test R3 at 7450 but, by the end of the day it had also tested the upper boundary of its zone, 7350.
Which did hold, the intraday low being 7351.12, but that did create a bandwidth test. Meaning a breakout was imminent.
As the market closed that day at 7361.63 the odds were in favour of that breakout being down into its zone.
Wednesday saw the zones bottom boundary tested, 7250, which also made that day a zone bandwidth test.
The next level of support was R3 at 7150, and if you knew that then you pretty much had Thursday and Friday covered. Thursday’s intraday low was 7131.69 whereas Fridays was 7148.50.
The trouble is that the FTSE has now crammed into two weeks what we would expect to take the entire expiry. Well, three weeks actually, the final week being needed to get it back to its zone.
We have seen this setup before, and in those instances the market stayed in its zone for the entire third week (excitedly going nowhere) before the final week breakout.
Therefore, we would like to see the same, but we doubt this will happen as there are too many geopolitical things going on.
So, all we can say, is take note of the ratio levels and then watch very carefully what the market does when its around them, as either up or down, it has now been there already.
Range: 7250 to 7350
Activity: Very poor
Type: On balance bearish