FOOTSIE DAILY CHART
A common topping formation involves three consecutive higher highs which I like to call a “three strikes and you’re out” top. This looks to be in play here denoted by the numbers 1, 2 and 3. The first two tops appear to be in place while we still await the third and likely final high.
The coming third high looks set to be accompanied by triple bearish divergences in the Relative Strength Indicator (RSI), the Stochastic and Moving Average Convergence Divergence (MACD) indicator. This often leads to a significant decline and that is certainly my expectation here.
The Parabolic Stop and Reverse (PSAR) indicator, which pertains to the dots, still has a bullish bias with the dots underneath price so that offers no resistance to new highs.
The Bollinger Bands can be seen to be tightening up which generally means a consolidation or trend change. I favour the latter!
Also, a common feature found at tops is price trades well above the upper Bollinger band before reversing back down. I suspect that is about to play out here. The upper band is currently around 6900 so I’d be looking for the final high to be somewhere above there.
Once this coming high is in place I expect a big downtrend to commence.
Let’s now look at the monthly chart.
FOOTSIE MONTHLY CHART
We can see the last major low, which was in October 2014, was a higher low. So a higher high was to be expected and price has recently just clipped the previous major swing high so we now have a higher high.
Assuming a massive breakout to the upside is not about to take place, the coming top is set to be accompanied by multiple bearish divergences on the RSI and Stochastic indicator while the Momentum indicator shows momentum has been declining since the first high in 2009. These are bearish indications indeed.
You could liken the current price action with a marathon runner who is finally reaching the finishing line on seriously wobbly legs after a build up of lactic acid. Well, by my estimations, price is now in the lactic acid phase!
So where is price likely to put in a top?
I have drawn a green highlighted rectangle and I expect price to top somewhere inside there. The top of the rectangle stems from the all time high set in 1999 at 6950. This level should provide heavy resistance and I doubt price will trade above there.
The bottom of the rectangle is the second higher high at 6886 and price has already pushed marginally above there so we are now right in the zone.
So the high should be between 6886 and 6950. Can we narrow it down further? Perhaps.
The 2000 high was at 6930 and I personally would like to see this coming high clip that level or at least go close. But that’s just me being finicky.
So, my target for high on the Footise is 6930 give or take a few points.
Once the top is confirmed we can look into likely levels for the bear trend to end. All in good time.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales
Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.
Bears have been standing before a steamroller so far this year
Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.