FTSE Index

Since breaking the Trend Channel we saw the FTSE make a run towards our 11th of December low at 5654 only reaching 5684.5. This was a big relief for the Bulls as a breach of this would give the Bears plenty of reason to get exited. Yesterday’s recovery from the lows has left us with a Spinning Top which indicates we may have done enough for now on the downside. Early trade today is also supporting this idea although there is more work to be done before we are safe.

Indicators In Play

A Spinning Top is a slightly confusing term as these also occur at the bottom of moves.  These Candlestick shapes are where the open and close are situated in close proximity to each other and are around the middle of a decent range day. This indicates that there was relative equilibrium between the buyers and sellers but this is not the strongest reversal signal.

Summary

There is some hope here but there would be no hesitation in shorting this market if we did take out 5654. As for the upside, we would like to see a close above yesterdays high at 5840 before we dipped our toe. However, there is plenty of work to do here before we get really friendly as the nerves in the market place are still very evident.