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UK FTSE 100 (.FTSE) gains start to ease off

UK FTSE 100 (.FTSE) gains start to ease off

The market seems to be entering a second stimulus phase, with fiscal measures now expected to come into play after monetary policy failed to lift market sentiment. The promise of action from US President Donald Trump has provided a boost globally, lifting the FTSE 100 back towards yesterdays high of 6239.

This does look like a retracement with the expectation of a widespread coronavirus pandemic ensuring that the wider outlook remains bearish. However, we could see further upside during this fiscal stimulus phase, with today’s Trump announcement laying the groundwork for how markets will react to similar measures from other nations. For the short term, the bearish engulfing pattern points towards a move lower. However, there is a chance we are retracing as a precursor to another leg higher as we move in to close the gap. It all depends on whether this is simply a ‘buy the rumour, sell the fact’ move, or a precursor to further gains later today.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 7,054.87.

The projected upper bound is: 6,255.72.

The projected lower bound is: 5,599.67.

The projected closing price is: 5,927.69.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 7.3905. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 18.13. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -161.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 15 period(s) ago.

Rex Takasugi – TD Profile

FTSE 100 INDEX closed down -5.540 at 5,960.230. Volume was 125% above average (neutral) and Bollinger Bands were 326% wider than normal.

Open     High      Low     Close     Volume___
5,965.7706,231.0605,927.8505,960.2301,729,615,744
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 6,570.21 7,307.40 7,332.48
Volatility: 54 31 20
Volume: 1,468,795,008 808,842,560 749,630,272

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FTSE 100 INDEX is currently 18.7% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .FTSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .FTSE and have had this outlook for the last 30 periods. Our momentum oscillator is currently indicating that .FTSE is currently in an oversold condition.

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