Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

FTSE100 - The Footsie Triple Step

Stock-Markets / UK Stock Market Jun 12, 2014 - 12:30 PM GMT

By: Austin_Galt

Stock-Markets

I’m gonna vary it up here and go with some bottom up analysis beginning with the daily chart.


DAILY CHART

I have added a Relative Strength Indicator (RSI) with a downtrend line showing a bearish divergence emerging. With price now retreating, once done perhaps we could expect one last push to a marginal new high above the recent high of 6895 and for it to coincide with a third weaker RSI top. A nice triple bearish divergence. Then a significant move down could be expected.

MONTHLY CHART



Now skipping straight to the monthly chart. Just a couple of things I wanted to show here. Firstly, a Momentum Indicator with a downtrending line across tops demonstrates this bull market is exhausted. Time is nearly up. The highlighted green rectangle area is where I expect a top to form without taking out the all time high from 1999 at 6951.

From the daily chart it could be surmised that price goes down the rest of this month and then comes up for one last little marginal high, perhaps topping out in July.

Now let’s move on to the yearly chart of the UK stock market to get the big picture. And this is where things get interesting.

YEARLY CHART



It can be seen that a massive triple top looks to be just about formed. You could just about tippy toe across those tops. A triple step. But what does the chart tell us? Well, to my eye, it looks like a massive consolidation pattern which began with the first top back in 1999. Since then it has been one long slugfest lasting around 14 years so far and counting.

Now the general rule of thumb is that whichever way price comes into a consolidation pattern is the way price will leave the pattern. In this case, price went up into the pattern. Therefore, price should break out to the upside when this battle royale finally reaches its conclusion. But will this breakout be now? I seriously doubt it. The all time high in 1999 was 6951 and that is the level required to be taken out. Price isn’t far way though with last months high at 6895 being less than 1% from the all time high.

Now let me indulge myself with some personal speculation. Firstly, I think the 1999 top will hold now thereby putting a triple top in place. Therefore, the third top should fall somewhere inside the green highlighted rectangle area which is between the 1999 top and 2007 top. Price is there now.

Now assuming a triple top is set, price can then come back down to test the bottom of the consolidation pattern which is the 2003 low at 3277. Keep in mind that this structure appears to be a consolidation pattern in an uptrend and once finished a breakout to the upside can be expected. So this means that the move down should be held by the 2003 low. Now just as this current top has clipped the second or middle top, I also expect the triple bottom low to clip the second or middle low which was set in 2008 at 3460. So the triple bottom low should fall somewhere between 3277 and 3460. This area is denoted by the purple highlighted rectangle.

Now this is when I had an “ah ha” moment. Assuming the analysis is correct, a low in the purple rectangle area will mean price has dropped around 50% from the highs. Conveniently paying respects to one of Gann’s discoveries being that lows are often 50% of the high price. But the “ah ha” moment is applying the conclusions from this analysis of the Footsie to the US markets. For example, a 50% drop in the Dow Jones Industrial Index would make for a low of around 8500. This clearly argues against the megabears predictions of total annihilation of US stock indexes. This is probably the most valuable piece of information to take away from this analysis.

So, taking a line from the West Coast hip hopster, Ice Cube, all those mega-permabears may wanna check themselves before they wreck themselves!

Bio
I have studied charts for over 20 years and currently am a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts there seemed to be a dearth of technical analysts, at least ones that had a reasonable idea of things. So my aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com

© 2014 Copyright  Austin Galt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules