FTSE meets the first resistance during this vibrant recovery

Fear has big eyes. When two weeks ago, everybody was talking about the market mayhem, we stayed calm. Situation was bad but we were still above the major supports. We said back then, that for the major long-term sell signal, we need to see the following breakouts: 11900 on DAX, 2540 on SP500 and 7100 on our today's hero: FTSE.

 

All those three indices, that we had on our radar, were approaching those important areas in the same time and all of them used them for a bullish bounce. That was pretty remarkable sign of a relative strength of the whole market. Well, Americans recovered a bit better than Europeans but traders from the Old Continent are still safe (for now).

 

 

Lets start from the very beginning. Troubles on FTSE started with the false bullish breakout (grey) of the resistance on 7600 points (red). Then, the snowball effect came and the index broke two up trend lines (black) to stop only on the 7100 mentioned above. Blue area was the place, where we got a bullish pin bar on a daily chart, which actually initiated a reversal. Correction stopped on a first important resistance on the 7300 points (orange). You have to admit that is very interesting how FTSE respect round levels here.

As long as we stay below the orange area, we still have chances to test the blue support again. The sentiment is neutral though and will stay this way as long as we will be locked inside the rectangle between 7100 and 7300 points. Breakout of the upper line will trigger us a buy signal with a target on the 7600 and the breakout of the 7100 will open the gates to hell with a first potential target on the lows from the mid November, so around 6700 points.