FTSE 100

Briefly

Published 25th June 2018 & validated 5th July 2018

The FTSE 100 is most likely within a final swing into a cyclical top. The main question is whether the swing finished in May 2018 or extends further to the upside. We expect the subsequent correction to last multiple months to a couple of years.

Market Pulse

Published 12th July 2018 

There is a time to go long, there is a time to go short, and there is a time to go on vacation. Right now it’s time to go on vacation regarding European equity indices.

The FTSE 100 index continues its price action in a complex manner. Our technical chart below remains perfectly valid. UK equities could either swing into a final cyclical high or their cyclical high has been reached already.

We have to be patient in order to get more hints about the exact FTSE 100 Elliott wave pattern short-term. Fear of missing out must not stand in the way. A resolution to the upside will be most likely confirmed by another major European equity index. It will break important trend channels or important resistance levels. That kind of action will most likely provide some form of a more attractive risk/reward entry opportunity than we get right now. Similarly, a resolution to the downside post a cyclical top will most likely result into a recognizable motive wave. More important, the subsequent three-wave retracement is likely to be a sizable second wave. That may provide a good entry opportunity for short speculative position for traders.

All in all, we are neutral on the FTSE 100 as well as on the other major European indices right now. We prefer to stay on the sidelines and wait for better risk/reward opportunities.

We have published a broad overview of European equity indices on SeekingAlpha. It gives our big picture of what we expect for the major European indices during the next years.

Published 5th July 2018

The FTSE 100 Elliott wave structure is getting closer to making a critical decision. Its pattern continues to leave both options open, which is a very similar setup to the rest of Europe. The best option appears to be on the sidelines and closely watch for early signs of the next swing:

  • An upside break of the orange trend channel confirmed by similar action from another European index is bullish
  • Swift action to the downside that gets confirmed by continental Europe (Eurostoxx 50 & CAC 40 are close to mid-term trend support) is bearish

The key takeaway is that we are most likely in a worldwide topping process and surprises are rather the norm than the exception in such phases. The FTSE 100 is in a setup that can go both ways. That’s a technical and behavioral conclusion. Confirming action is vital for a short-term outlook at the moment.

Short-Term FTSE 100 Elliott Wave Analysis

Published 25th June 2018 

The air is gettin’ thinner for the FTSE 100 at this stage.

British and French equities were leading major European indices during the current rally. The FTSE 100 reached a brand new all-time high during the month of May. Another couple of impulses could follow to the upside before the cycle ends. However, the pale blue trend to the upside needs to get broken for that as part of a fake breakout. It acts as resistance and we see a terminal Elliott wave count of multiple degrees into that resistance.

That is not something, which looks like a promising bet at the moment. Nevertheless, odds for the black scenario increase if we see the yellow trend channel break to the upside before it morphs further to the downside. Moreover, the trend break should get confirmed either by other major European indices or the GBP/xxx pairs.

Last but not least, the FTSE 100 showed complex wave structure behavior around major tops during the last 20 years. The same probably happens since 2016. That may signal a significant top around today’s levels.

All in all, odds shifted slightly in favor of the red scenario.

Medium-Term FTSE 100 Elliott Wave Analysis

Published 15th February 2018 & amended 22nd May 2018 (chart only)

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 in 2018.

 

Technical Analysis