Good morning
The FTSE broke through 5650 yesterday so the short term trend of the index has turned neutral. I say neutral and not negative for the following reasons:
A)The FTSE started its rally on the break out of an inverted head and shoulders pattern at 5477 back in September. Its very easy to get caught up in world events but unless we see prices move below this level we should assume we are still in a correction from 5903.
B) The Elliott count is far from ideal. Usually when the pattern is unclear it is counted as corrective. If we have clear 5 wave action then the action is impulsive. Impulsive action is the direction of the overall trend. In this case its still long term up.
C) We have left a trail of gaps above current levels (5620) and 5800. The extreme gap in particular at 5668. These usually fill over 3 trading days. This could indicate we may experience horizontal activity between 5530-5800 in the short term.
When I met Mark I was enormously impressed with his FTSE trading abilities, so much so that I decided to recommend him to my clients. John Piper
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