We had reached as low as 4400 on the bid before that happened, which also coincided with the lower boundary of the ascending channel that we have been respecting since March. We also broke above the triangle formation that was in the works, in a fashion similar to the break above the 4100 line in mid-April. Now, we have to see how the FTSE reacts during market hours on Monday, but momentum on intraday charts is strongly positive as of Friday's last numbers.
Looking at the daily chart, note that:
- After almost 20 days pointing south, momentum seems on track to go back to positive: this depends on the next few days obviously. Momentum on other indices, like the NASDAQ, the Euro Stoxx 50, the Hang Seng and, less evidently, the S&P 500, DJIA and DAX, is already looking north.
- Last week, the 30 day weighted moving average (in purple) acted as support.
- The 4670s acted as resistance back in November of last year (there is a typo in the chart mentioning October), and in January.
- Please also note that we closed 2008 just above the 4400 line (4405), so we are currently positive YTD.
When compared to the past 9 months, volatility over the past 20 days has been subdued as we have ranged in a 200 point zone between 4300 and 4500. Look at the Alligator indicator on a daily chart: it's closed shut, signaling that the next move (up or down) is going to be quite powerful.
Lastly, look at the action on the weekly charts and notice how the candles react when close to the Bollinger bands:
- Bollinger bands often act as resistance or support.
- See how in trending markets, regardless of direction, the weekly action often stays close to the upper (in an uptrend) or lower (in a downtrend) Bollinger band.
- Also compare the current width of the band to the past.
I'll be watching momentum closely these coming days: if we turn back to positive we might have a considerable northbound move coming. That said, let's not get ahead of ourselves because we rallied for 45 minutes into the US close on Friday.
