ICN.com Launch Technical Portal
All new trading strategies, market analysis, and extensive market coverage! We would love to hear your feedback!
When we look at the monthly chart for the index from a pure classical point of view, we will find three connections that started at the former low of 3440.00 which was recorded in March 2009.
Adding a trend line by angle to this graph would be able to give us a 33 degree angle and that is more than required to define a trend line, or in other words, more than typical for a trend in both cases, up and down. Having a deeper look at our captured medium term uptrend reveals that it was a correctional trend line not a major one since the movements have been limited at 6090.00 zones where 76.4% Fibonacci retracement of the entire downside rally from 6800.00 -recorded in October 2007- to 3440.00. Actually, the breakout below the aforementioned trend line could be an indication that the correction might have been limited earlier with touching 76.4% level and this will be our first classical technical catalyst that argues us to suggest potential bearishness during 2012 to resume the major downside trend that started at 6800.00. The second motive is consecutive four closings below 5525.00 zones which represent 61.8% Fibonacci of the downside wave from 6800.00 to 3440.00. Let us now move to the Fibonacci levels that dominate the correction for the upside move from 3440.00 to 6090.00 where we can notice that FTSE is presently struggling below 23.6% Fibonacci of this upside wave after touching 50% earlier and we have our technical reasons that encourage us to say that the index will attempt to retest 50% Fibonacci level once more on its way to reach at least 61.8% at 4450.00 as a primitive technical target as follows:
Moving to the weekly basis will show you that a huge bearish classical reliable pattern is underway where we believe that the index is presently forming its right shoulder.
Of course, the formation isn’t a complete pattern until the value of the index penetrates the confirmation line or rather the neckline at 4760.00 zones. But, we also have our technical reasons that may assist the index to retest the suggested neckline areas since SMA 100 continues pressuring it negatively; whilst RSI 14 has its own resistance line as seen on the provided weekly graph.
The technical obstacle that may slow the bearish actions during the coming period resides at 5070.00 zones where former support zones have been drawn during the past three years.
Breaching through 5070.00 will weaken 4760.00 zones and will trigger a panic sell-off towards 4075.00 where our major technical objective resides; noting that a break below 4075.00 will threaten the significant low of 3440.00 .
To conclude, the bearishness is in favor during 2012 as we classify the upside move from 3440.00 to 6090.00 as a correction not as major trend but on the other hand, a breakout above 6090.00 will damage the bearish classical pattern and will open the door towards 6800.00 again.
Adding a trend line by angle to this graph would be able to give us a 33 degree angle and that is more than required to define a trend line, or in other words, more than typical for a trend in both cases, up and down. Having a deeper look at our captured medium term uptrend reveals that it was a correctional trend line not a major one since the movements have been limited at 6090.00 zones where 76.4% Fibonacci retracement of the entire downside rally from 6800.00 -recorded in October 2007- to 3440.00. Actually, the breakout below the aforementioned trend line could be an indication that the correction might have been limited earlier with touching 76.4% level and this will be our first classical technical catalyst that argues us to suggest potential bearishness during 2012 to resume the major downside trend that started at 6800.00. The second motive is consecutive four closings below 5525.00 zones which represent 61.8% Fibonacci of the downside wave from 6800.00 to 3440.00. Let us now move to the Fibonacci levels that dominate the correction for the upside move from 3440.00 to 6090.00 where we can notice that FTSE is presently struggling below 23.6% Fibonacci of this upside wave after touching 50% earlier and we have our technical reasons that encourage us to say that the index will attempt to retest 50% Fibonacci level once more on its way to reach at least 61.8% at 4450.00 as a primitive technical target as follows:
- Ribbons lines –EMA 10 to 80- are currently covering the movements.
- AROON as a representative for trend indicators reflects a bearish case; noting that it is a monthly chart not a weekly or daily chart; thus, the sign is classified as a strong one.
- RSI 14 -momentum- started to show bearish tendency via stabilizing below the level of 50.00, while showing southern tendency.
Moving to the weekly basis will show you that a huge bearish classical reliable pattern is underway where we believe that the index is presently forming its right shoulder.
Of course, the formation isn’t a complete pattern until the value of the index penetrates the confirmation line or rather the neckline at 4760.00 zones. But, we also have our technical reasons that may assist the index to retest the suggested neckline areas since SMA 100 continues pressuring it negatively; whilst RSI 14 has its own resistance line as seen on the provided weekly graph.
The technical obstacle that may slow the bearish actions during the coming period resides at 5070.00 zones where former support zones have been drawn during the past three years.
Breaching through 5070.00 will weaken 4760.00 zones and will trigger a panic sell-off towards 4075.00 where our major technical objective resides; noting that a break below 4075.00 will threaten the significant low of 3440.00 .
To conclude, the bearishness is in favor during 2012 as we classify the upside move from 3440.00 to 6090.00 as a correction not as major trend but on the other hand, a breakout above 6090.00 will damage the bearish classical pattern and will open the door towards 6800.00 again.
