After consolidating below the support for the medium term upside wave, which was breached early May, the index completed a Head & Shoulders pattern and breached its neckline at 4980.
FTSE in Depth
This bearish pattern supports our expectations for further bearishness over short term basis which is part of the downside correction for the entire upside wave from 3441 till the recorded top at 5797.
The downside wave so far breached 23.6% and 38.2% correction. Momentum indicators are providing oversold signals which might force the index higher in a correctional move to retest the breached neckline confirming the bearish pattern before resuming the short term downside move.
The full target resided at 4360 which is the 61.8% correction for the full upside move mentioned.
The 50 Days MA is supporting the downside move with providing negative pressure on the index, though we should note that breaching 4980 with stability above it fails the bearish scenario and the index will settle with the reached levels and will resume the upside move over medium term basis.
By: Yasir Mubarak
Senior Technical Analyst
yasir.mubarak@ecpulse.com
www.ecpulse.com