Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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