Weekend wrap up

Since the 8th of April the FTSE has been lurking around the lower boundary of its current ascending channel, finding mild resistance between 4020 and 4040. On Thursday, April 16th, we finally broke above this resistance level, as well as above the 50% retrace area (4080) from the Jan. 6th. high. The upper boundary of the current upward channel coincides with the 61.8% retrace of the Jan. 6th high in the 4200-4220 area.


The 4080 area had also provided some resistance in early April. As a note, we are currently above the 200 period weighted moving average for all intraday charts time frames: from 15 minutes to the 8 hours.

Looking at the daily chart now, as many I am sure noted we broke above the descending trendline we had held since May 2008. After a flirt with the negative side, momentum as now shifted again towards the positive. We are now closing in on the 200 day weighted moving average, which has provided resistance in both August of last year and on January of this year: it is also close to the 61.8% retrace level from the Jan. 6th high mentioned above (4200 area).



Keeping the longer term picture in mind, please notice the following on the weekly chart that follows:
- Momentum is still positive, but I would pay close attention to the action on the daily chart.
- Positive divergence is building, which mimics the negative divergence that had built during the last phase of the bull market.
- We are now hovering between the 38.2% and 50% from 0 (zero) to the all time high of 6750. We have yet to touch the 50% line: given that most expect another down leg, a slow crawl to the 3300 area is likely, hopefully building a bottom 5% to 10% below the low hit in March of this year. This fits with the positive divergence argument mentioned above.