The FTSE 100 index in its 4-hour chart, shows a potential bearish trade setup. In this post, we review some factors of our short-side positioning.
1. The Elliott wave structure suggests that the British index could create a new bearish leg. Under that scenario, the FTSE 100 would likely visit its early October low of 7,004.25 pts.
2. The possibility of a decline gets supported by the "extreme greed" sentiment. Please note that this indicator doesn't provide an immediate reversal signal.
3. A short-side position should be triggered if the British index drops and closes below 7,300.2 pts. In the conservative scenario, the potential profit target is located at 7,244.35 pts. A downward extension could drive the FTSE to test the 7,197.5 and 7,135.95 pts.
4. The bearish setup will be invalid if FTSE pierces but doesn't close below 7,300.2 pts; or if the index climbs and closes over 7,365.7 pts.
Trading Plan Summary
Entry Level: 7,300.2 pts.
Protective Stop: 7,365.7 pts.
1st Profit Target: 7,244.35 pts.
2nd Profit Target: 7,197.5 pts.
3rd Profit Target: 7,135.95 pts.
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Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
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