FTSE Resistance Remain Intact At 6500/6600
06 July 2020
FTSE price action revolves around 6250 levels as we prepare to publish this article. Bears should be inclined to take back control from here and turn lower towards 4750 levels, going further. The indice is expected to ideally remain below 6500/6600 resistance.
Let us have a look at probable wave counts presented on the hourly chart here. The drop from 6500/10 through 5920/30 can be clearly sub divided onto 5 waves (impulse), labelled as Wave 1 of a lower degree. Ideally, an impulse drop should be followed by a corrective rally.
FTSE had rallied from 5920/30 through 6350/60 in 3 waves, labelled as potential a-b-c, hence corrective. Also note that the counter trend rally had reached close to fibonacci 0.786 retracement of the earlier drop, around 6387 as spread on the chart here. This could be potential Wave 2.
Alternately, Wave 2 could terminate around 6360/70 mark before resuming lower again. Either way, FTSE is expected to resume Wave 3 lower either from current price action or from 6360/70 mark, higher up.
The above potential wave count represents the most common pattern of Elliott Wave Principle. 5 waves Down, followed by 3 waves Up. If the above counts hold well, FTSE could be well on its way lower, as Wave 3 progresses. The indice will accelerate its drop as 5930 breaks.
Overall, traders might be well inclined to initiate fresh short positions around 6250/6300 and keep protective stops above 6800/6900 (shall be revised later). The projected targets point below 4750 levels going forward.
Prepared by
Technical Analysis Team
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