FTSE100 – Possible Reverse ?

/ The instrument (UK100) is available for trading on the Varchev Absolute Trader platform. The article is not a trade recommendation. /

England’s index is one of the best performers, but recent data points to a potentially sharp economic slowdown, inflation is still very high and, although the BoE is less hawkish, interest rates are likely to rise further , but at a slower pace.

Future Markets

FTSE100 futures contracts are trading around current levels for the next two quarters, with the trend up.

Market Profile

The data shows heavily reduced volumes in the Value area, which means the price could move quickly in either direction. The more substantial increase in volume is seen in the 7400 – 7500 zone, signifying a potentially slow and difficult transition and therefore support.

Technical Picture

Price action shows exhaustion of uptrend, price is highly likely to close below the uptrending price channel today. Sequential has started counting down and DeMarker is breaking oversold, which could cause short acceleration. My expectations are for the beginning of a downward correction, which may initially take the index to 7400 – 7500.

Conclusion:

On a breakout of today’s Daily – Low and a close below it, given the low volumes in the Value area, the most aggressive traders can look to enter short positions with a potential first target in the 7400 – 7500 zone. I would like to note that this is trade against the current trend.

Alternative scenario:

Return and close above the local resistance zone (7950 – 8000) will mean the potential development of a new upward wave. Stop loss for short is above the resistance zone, measured against the size of the margin account.