FTSE Resistance Remains At 6500/10 Handle
29 June 2020
FTSE had dropped sharply lower from 6500 highs on June 09, 2020. The drop was very sharp, extending towards 5930 levels around June 15, 2020. The above bearish boundary is expected to remain intact going further, and FTSE should be heading lower below 4700.
Let us look into the hourly wave counts since 6500 highs. The drop between 6510 and 5930 can be clearly sub divided into 5 waves labelled as lower degrees on the chart here. The termination around 5930 has been marked as Wave 1 of one higher degree.
Ideally, a 5 wave structure is followed by a 3 wave correction in the opposite direction. The price action between June 15 and 23, 2020 has been in 3 wave’s a-b-c and in the opposite direction. The rally can be termed as a counter trend, which reached just above the fibonacci 0.618 retracement of Wave 1, around 6355.
Also note that the wave c of the counter trend rally was a potential ending diagonal, 6160 towards 6355 respectively. An ending diagonal is a potential reversal pattern and FTSE might have topped around 6355/60 region. If the above counts are correct, FTSE must hold below 6355 highs print on June 23, 2020; going forward.
Alternately, the indice might print a shallow high above 6355 to complete the correction. It has been labelled as Wave 2? On the chart here. Either way, FTSE should be poised to continue lower towards 4700 mark, until prices stay below 6500/10 resistance.
Most traders might be inclined to initiate fresh short positions as close to 6200/6300 levels, with protective stops above 6500/10 mark and projected targets below 4700 mark. Also note that even if FTSE manages to break above 6500 resistance, it would face another hurdle at 6590, going forward.
Prepared by
Technical Analysis Team
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