FTSE might have carved a lower high around 6180 over the last week. The indice is trading below the 6000 handle for now, and is might test the 6100/50 mark again, before reversing lower again. A break below 5865 will accelerate lower towards 5575 mark.
FTSE probable wave structure is as follows: The medium term structure remains bearish as long as 6500 resistance holds. The drop from 6500 through 5930 was in 5 waves, hence an impulse. It has been labelled as Wave 1 on the chart here.
The subsequent price action was a corrective wave towards 6339, labelled as a-b-c Wave 2. Also note that Wave 2 had retraced through the fibonacci 0.618 levels of Wave 1. If the above proposed wave structure holds well, FTSE should stay below 6339 and push through 5575 respectively.
Furthermore, the recent rally towards 6180 was stalled right at the back side of support turned resistance trend line. The currency might face strong resistance there if bulls attempt a re-test. FTSE should proceed lower towards 5575 thereafter.
Alternately, if FTSE manages to push through 6200, it would open doors towards 6350 before finding resistance again. For the above bearish structure to remain intact, it is critical for 6500 to remain intact. A break higher might change the medium term structure.
Traders might be looking to sell on rallies towards 6100/50 levels, with protective stop above 6500 and projected targets below 5575 in the near term. Watch out for a break below 5860 for FTSE to accelerate.
Technical Analysis Team
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