FTSE Holds Below 6500 Resistance
27 July 2020
FTSE might have resumed lower towards 4700 levels over the next several weeks. The indice has turned lower again from 6300 levels and a break below the counter trend line would accelerate the drop further towards 5600 in the short term.
FTSE probable wave counts are as follows: The indice has been dropping since 7724 levels earlier (not seen on the chart here). The indice has carved a potential larger degree Wave (3) between 7724 and 4750 respectively.
Thereafter, it has been successful in producing a corrective rally towards 6500 levels, which could be potential Wave (4). Also note that potential Wave (4) had reached close to fibonacci 0.618 of Wave (3) earlier (the above has not been labelled here).
Now, let us look at the lower degree counts since 6500 highs. The drop between 6500 and 5931 has been an impulse, labelled as potential Wave 1. An impulse is ideally followed by a corrective wave which is in the opposite direction.
FTSE had produced a corrective rally towards 6320/30 levels, defined as potential Wave 2 on the chart. If the above lower degree counts are correct, FTSE would stay below 6500 mark and turn lower towards 4750, over the next several weeks’ time.
Traders might have initiated fresh short positions around 6300 levels already, with a protective stop above 6500 and targets below 4750 respectively. Only a push above 6500 would change the structure over the medium term.
Prepared by
Technical Analysis Team
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