It was only the 18th of April that we last posted the FTSE as chart of the day; however, current price action has major directional implications. We have been friendly towards this market since the 5700’s, with 6090 as the target. Only a close above this point would indicate further gains. After quite some work around this level we finally saw a close above here which now sees us thinking in terms of an old gap up at 6337.5. Using the Dow theory, higher highs and higher lows confirms the Bull Trend despite negative sentiment.
Indicators in Play
Charles Dow defined a Bull Trend as a series of higher peaks and higher troughs. The precise reverse indicates a Bear Trend. Popular opinion is that this is the basis of modern day technical analysis. This is also the basic principle of more complex analysis such as the Elliot Wave.
Summary
We are still holding the view of buying any dips when the opportunity presents itself. Only a print below 5960.5 changes this picture. Our next objective is to push on, with our gap from the 8th of January at 6337.5 being the level we are gunning for.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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