Published 6th February 2018 & validated 9th March 2018
The FTSE 100 has already entered or is close to entering into a cyclical correction. Patience during the correction will result in an attractive entry opportunity for UK equities. Medium-term we forecast a secular bull market for the FTSE. It will last for the major part of the coming decade.
Published on 9th March 2018 @ 12:30 GMT
The FTSE 100 records 5-waves to the downside now. This may be the end of an irregular flat or the beginning of a cyclical correction. We elaborate this in more detail further below.
Whatever it is, we have not witnessed any major market reversals that did not get retraced by at least a 38.2% Fibonacci in the past 20 years. Moreover, typical 2nd wave retracements tend to be much deeper than just that. Hence, it is very likely that the FTSE 100 climbs at least towards 7,400 points even within our bearish scenario.
To sum up: We cannot provide a high-confidence forecast if the FTSE reached a cyclical top but we can forecast with high-confidence that the index will see higher levels than today.
Short-Term FTSE 100 Elliott Wave Analysis
Published on 6th February 2018
The FTSE 100 has been moving roughly sideways throughout 2017. Past days drop erased all gains from 2017. The structure either resolved into an expanding ending diagonal or into an irregular flat. This implies either a terminal or near terminal FTSE Elliott wave pattern of intermediate degree.
The exact pattern still needs confirmation. The FTSE 100 has a very complex wave structure during the past couple of years. Both scenarios are therefore equally likely at this point. Their count is neither textbook nor does it invalidate Elliott’s rules.
Medium Term FTSE 100 Elliott Wave Analysis
Published 15th February 2018
The FTSE 100 has traced out a triangle structure, which ended in 2011. It looks similar to many other indices in continental Europe. We see the index take off to new highs despite short-term pullbacks. The light blue trend channel in the chart below is the beginning of cycle wave v. This wave is a secular bull market and will carry the FTSE higher for a major part of the coming decade.
Near-term we expect a retracement of intermediate wave (1) to carry at least into the 6,600-6,800 area. We see this pullback as a great “buy the dip” opportunity to invest in the UK stock market. We expect to see this retracement begin around Q1 2018.