Indices Market Analysis – FTSE 100

*Live market analysis of FTSE 100 Index!*

This blog post is to show you my technical analysis and thoughts on the FSTE 100 index and where I think price might go in the next few days and weeks. These are purely my thoughts and this is not financial advise or intended as a trading signal.

As always, let’s start off with the higher timeframe weekly price chart and use what has happened in the past few weeks to help determine where price might go in the coming weeks.

As always, you can track this technical analysis live via the TradingView platform by clicking on the link below:

FTSE 100 weekly timeframe chart

The weekly timeframe chart shows a lot of bearish selling pressure coming in to the markets from end of last month. This is shown by the big sell off and 3 consecutive bearish weekly candles forming. From this, I am looking to capitalise on this bearish momentum by looking for pauses/consolidation and pullbacks to enter short positions with good reward:risk ratios.

The weekly bullish trendline I have drawn on the chart was broken last week and effectively retested so this is another confluence to look for short positions. You can see this break and retest more clearly on the daily timeframe shown below.

FTSE 100 daily timeframe chart

The daily timeframe chart shows the same bullish trendline as the weekly chart but you can see the lows used to draw it and the clear break of the TL last week. It is also clear to see the big selling pressure that has come in to the market on these higher timeframes with a sharp sell off occurring from 7700.00.

Ideally, I would like to enter short positions on the next 4hr/1hr consolidation with a high reward:risk ratio entry. I am not a fan of simply selling on the break and close of a trendline because that tends to produce trades with drawdown as a common feature and poor reward:risk ratios.

This can be seen on the FTSE100 daily timeframe chart. If I were to have shorted the index on the close of the daily candle on the 5th August, which was the large bearish candle that broke and closed through the bullish trendline, I would currently be in drawdown and the position would have had a reward:risk ratio of around 1:1 if I was targeting 7000 and had my stop loss above the daily highs.

Let’s look at the 1 hour timeframe chart to try and find a potential suitable short position trade entry with a good reward:risk ratio.

On the 1hr timeframe chart, I am looking at the current consolidation as a potential entry point for a short position. After such heavy momentum, markets tend to pause and consolidate before continuing and this is the basis behind pattern trades like the flag continuation and wedge continuation patterns. I cover this style of trading in a previous blog post which can be found by clicking on the link below.

Much like with the higher timeframe, weekly chart and trendline, I am not looking to simply enter a short position on the break of consolidation. I am instead looking for new lower lows to be made to confirm the intraday 1hr bullish trend is reversed and the higher timeframe bearish momentum is continuing. I will then await a lower high and preferably a retest of the broken trendline before entering short positions.

Doing this has 2 main benefits. You get the benefit of the trend being confirmed as bearish with the lower lows and lower highs. You also get a much better reward:risk entry with the ability to use a smaller stop loss and larger distance to your profit target.

In this instance, I am looking to short the FTSE 100 index down to the next key psychological support zone at 7000. This number should hold significance with a lot of people so it would be a good place to take some/all of profits.

Thanks for reading my technical analysis on the FTSE 100 index. I hope it provided you with some insight in to how I analyse and trade the indices markets.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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