Bottom line:  FTSE bearish structure remains intact against 7700 levels but expect a counter trend rally to materialize soon.

Technical Analysis:

FTSE remains in control of bears as it hits a Fibonacci extension around 6000 levels, completing 5 waves drop since 7724 levels. Please note that FTSE could continue lower towards 5600 levels and it remains to be seen it the drop comes after a pullback or not. Traders might be willing to hold on to short positions taken earlier or at least take some profits around current price action (6000). The immediate wave structure since 7700 levels, seems to have completed 5 waves and has dropped below the Fibonacci 0.618 extension seen around 6100 levels. The drop until 6000 levels could be Wave (3) of a higher degree, since 7904 highs print in May 2018. FTSE has dropped to fresh intraday lows towards 5920 lows, at this point in writing and hence it might be safe to either hold short positions or look to sell on rallies. Please note that potential remains for a continued drop towards 5600 levels before FTSE could produce a meaningful retracement higher. Traders willing to initiate aggressive long positions might still wait for a meaningful bottom to be formed. The long term wave structure is intact as bears are completely in control since 7700 swing highs. Looking into the wave counts, FTSE had produced Wave (1) or (A) between 7904 and 6539 levels earlier. This was followed by a potential Wave (2) or (B) marked around 7724 levels. Since then, a higher degree Wave (3) or (C) has been underway and it is quite possible to see 5600 levels before termination. FTSE remains potential candidate to hold short positions towards 5600 levels. The tone is setting up for the bear market to continue.

Prepared by

Harsh Japee, Technical Analyst.

FTSE Chart

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