FTSE 100 Bull Breakout, Outside Down at LH, AIL

Market Overview: FTSE 100 Futures

FTSE 100 futures went lower last week with profit-taking high in a bull breakout. Back at the highs of the trading range for the last 12 months, it looks like the bull trend is gathering momentum again for a new high. Bears argue for more trading range, but many sell signals failed. Pullbacks can still be deep, but better to be long or wait to buy.

FTSE 100 Futures

The Weekly FTSE chart

• The FTSE 100 futures went lower last week with a bear outside down bar closing near its low.
• It was a four-bar bull microchannel, and last week was the first week to go below the low of a prior bar, where buyers were likely to be waiting.
• Bulls see a HTF bull channel, a bull Breakout of BOM and a breakout above a double top.
• I have selected a few measured moves I used to trade it, all of which got hit in the past few weeks.
• We are always in long, so it is better to be long or flat. There is nothing to sell here unless you are taking profits on longs.
• We could pull back here. Bears would like it to go to the December breakout point. That is the last breakout gap, and gaps close in trading ranges.
• And that is what the bears see – a trading range.
• For the bears, it is an attempt at a double top at a prior lower high, a swing high. They might argue that only one close above it is necessary.
• Look at the last 20 bars. How many good sell signals are there? Maybe 3 or 4? So, there’s an 80% chance this week is also not a sell signal.
• Bulls will likely be by the midpoint of that big bull bar from a few weeks ago. So even if we pull back for a few bars, we will likely go higher.
• Did the count restart? I think likely. The moving average slopes up faster now, and the space between the price and the MA is larger. So the momentum is increasingly bullish.
• Bulls can expect deep pullbacks but rely on your stop.
• I think some bears got stuck above the 3 bear bars. But most traders should have exited when the High 2 and High 3 set up.
• Traders should have rules for exiting trades, and the high probability opposite signal bars are a very reliable reason to get out!
• Expect sideways to up next week.

The Daily FTSE chart

• The FTSE 100 futures went lower on Friday with a big bear bar with a tail below it.
• It was the lowest close all week, so we will see if there is more selling on Monday.
• The bulls see a strong bull breakout bar with follow-through, so expect a second leg up.
• The pullback immediately after left a gap, showing just how many buy orders were sitting there. They weren’t filled until Wednesday.
• For the bulls, its a High 1 scalp and now they are probably waiting on a better signal bar for a High 2. They want it closer to the moving average.
• Big tails up and big tails down so a trading range. After such a strong breakout, it is more likely a continuation pattern higher.
• But bears want this to stay here long enough to disappoint the bulls.
• Bears see a DT on the weekly chart, but no bears want to sell so low in a bull breakout. They see a higher low and want a breakout below down to the MA and to close the breakout gap.
• I think traders should be long or flat here. It is better to avoid the short trades in case you get trapped out of the higher probability long.
• Now we have been in a trading range for a long time and they have a magnetic effect, bringin fresh new breakouts back into its zone.
• So bulls need to keep that gap open, but odds are still on a broad channel, where buyers wait for the deepest pullback to buy. Typically this traps beginners as they see it go always in short.
• Expect sideways to up next week.

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