Since recording the top around 6800 zone; the index started to form an impulsive downside wave, as seen on the provided weekly chart. We can see how the index succeeded in building 3 waves already; while it's presently constructing the grand fourth wave.
FTSE 100 Index - Annual Technical Analysis for 2010
_________________________________________________________
Moving above Ribbons lines -EMA 10 to EMA 80- supports the technical idea of reaching 61.8% Fibonacci level for the entire move from 6800 levels to 3440 levels.
We believe that the above discussed 4th wave will be competed at 61.8%, where then the grand fifth should start over medium term basis.
On a daily basis, the mixture between the classical overview and the harmonic studies shows that FTSE 100 has been capable of forming an inverted head and shoulders bottom pattern, where it formed an ideal ascending channel which helped it approach the projected scientific objective around 5520.00.
------------ EDUCATION -----------
-----TRADING METHODS ------
--------- FOR TRADERS --------
------------ OTHER -------------
The aforesaid areas meet with the PRZ -Potential Reversal Zone- for a suggested harmonic AB=CD pattern which might be capable of forcing the index to pullback once more, resuming the impulsive downside wave after it reached the classical and harmonic target.
Consequently, a clear reversal sign will be urgently needed to confirm this highly anticipated bearish scenario over the medium term
Actually, this awaited reversal, which we see need additional confirmations for our proposed weekly count for the Elliott waves studies, and we think that we will not be able to catch this reversal unless the areas of 5275 is clearly breached, accompanied by a stable move below it.
Having said so, the technical targets of our suggested bearish scenario resides around 4235.00 followed by re-targeting the recorded low of 3440.00.
The most sensitive areas that will face FTSE's southern trip are the areas where it will touch the lower line of the ascending channel around 5100.00 and 5000.00 zones as we can't ignore that the 5000.00 level itself is a psychological level which protected it from collapsing since November 03, 2009.
The above discussed scenario is the dominant projection, which the majority of our technical team supports. On the other hand, there is another point of view discussed during the previous period among the technical team, in order to cover all the expected scenarios for FTSE in 2010.
Briefly, it offers another potential count for the same cycle, as seen on the chart above. The different count scenario in this outlook offers a proposed completion for the impulsive downside wave at 3440.00 zones, and it talks about the protection which the index found from trend indicators as they are still moving upwards. Therefore, the index form their point of view is forming the grand wave (C) with extended targets around 6265.00, and probably the full correctional value around 6800.00.
To recap, we have to look at 6265.00 zones carefully, as a break out of theses areas will suggest that the bullishness is to continue and will invalidate the first negative scenario completely; around these areas the fourth wave will intersect the second wave and therefore invalidating the count.
Related Topics
_________________________________________________________________________________________________________________________________________
