Nb. Our comment on 24/06/24
Rather bizarrely, the zone in June never did actually move, but what we said about 8150 and 8250 being the critical levels for last week was spot on.
8150 was the centre of attention at the start of the week, whereas it was the turn of 8250 at the end of the week.
However, the most impressive moment came at the moment of the actual expiry, when the FTSE dropped 50-points in a heartbeat to achieve the settlement price of 8200.74.
The zone may not have moved physically but, there is absolutely no doubt, that for all intents and purposes it was in fact at 8200.
Now, if you look at the ratio table you will see we have included what the July ratios looked like back on the 17th, when June was still the front month.
The reason for this, is because it is worth knowing that the zone back then in July went from 8000 all the way up to 8150.
Not only that, but the Y ratio bandwidth stretched from 7750 all the way up to 8250.
The point of being aware of this, is that the zone in July has already moved down.
On top of which, the Y ratio bandwidth still goes from 7800 all the way up to 8250, so hardly any change at all.
Another point to mention, is that although the ratio at 8250 is R1, it is only just below the threshold of being R2. Which starts at 8300 anyway.
Considering the market closed on Friday at 8237.72 then there are no prizes for guessing which way is the path of least resistance.
And, it’s a very long path as well.
From a ratio viewpoint, then this should be one for the bears, at least at the start.
The only fly in this ointment, is whether or not they are still desperately trying to prove this index isn’t controlled by derivatives and is therefore as good to list in as any other market. Good luck with that is all we can say.
Range: 8050 to 8250
Activity: Good
Type: On balance only just bearish
www.hedgeratioanalysis.com
Nb. Our comment from 17/06/24 (NB. The June expiry)
It really does seem an age ago that the FTSE hit the intraday high of 8451.64 thereby experiencing the force of all that dynamic delta generated by R3 level ratio.
Since then, it has been a weekly progression of this index hitting the stepping stones of different ratio levels until it has reached where it is today.
So, and being true to form and as mentioned last week, the first three days of last week were all about R1 at 8250.
The respective intraday highs were 8245.37, 8261.74 and 8243.22 but, and significantly, none of the closes on those days were above 8250. The closest was on the Tuesday when the market closed at 8147.81.
However, the best test came on the Wednesday, with the market at 8200 it spiked up to the intraday high, near enough 44-points, before finishing at 8225 on a 5-minute bar. More impressively, it never got close to that high again for the rest of the day.
Anyway, more importantly, is what about the week ahead, especially as it’s the rollover and expiry.
Looking at the zone first and 8200 hasn’t made any further progress this week, which doesn’t rule it out of course, but it does mean it has its work cut out for it as it has it all to do in just a few days now. 7900 has also now pretty much ruled itself out of the picture, courtesy of it now being R1.
The intriguing aspect is the activity, and we suspect it is that low due to the simple reason that those opening positions have been matched equally by those closing theirs. What this means in reality, is that there is no agenda in play. At the moment at least, as rollovers tend to change this situation dramatically.
Also, don’t forget, this index is now down 200-points (2.4%) so far on this expiry. OK, it was ridiculously high to begin with, taking on R3, and it tried to get back above 8250 and failed, so both facts combined say to us that the trend is down.
Probably, the best-case scenario is that the zone moves to 8200, which would make 8150 and 8250 the critical levels for this week.
Range: 8050 to 8250
Activity: Only just registered
Type: Bullish
www.hedgeratioanalysis.com
