Play for Thursday, May 28th

I had spotted a potential double top formation a week ago, and began warning that a test of the middle of the top was likely.

Indeed, as I have said since Friday, the FTSE went up and weakened below the 4440s (yesterday's high was 4440).

Now, in order for this double top formation to be complete we need to break below its neckline: the 4300 line. We are currently quoted in the 4350s-4360s on the bid which is a potential ambush long area from the lows on Tuesday: if we rally on these levels at open and break above yesterday's high I will re-assess the bearish bias.

I'll be looking to add anywhere below yesterday's highs (a potential ambush short being in the 4390s to 4410s) but will also want to see us break below the 4300 line to be comfortable on these shorts.


We are currently just outside of the ascending channel, but, as mentioned, we need to close below the 4300 line. Momentum is negative on intraday time frames and daily charts. I would however like to highlight some arguments to support a continuation of a bear market rally:

• We have been ranging for over 20 days now and finding strong support on the 4300 line.
• The daily charts denote negative momentum and indicators have been moving downwards while the market has moved sideways: without a significant downside break we might be "recharging" the indicators for another move up.