Bulls holding their lines and rise to 7470 | North Korea ignored

5th September 2017

Was quite surprising how well the markets held up yesterday after the North Korea nuclear test over the weekend. The FTSE 100 had the merest of dips below the 7400 level but generally stayed between that and 7435 all day. Gold also maintained the gains from Sunday night, while the biggest mover was Bitcoin – down – after China pulled the rug from under it. The US is holding back on North Korea for the moment but urging the UN to do more. If it didn’t sell of yesterday then it would be surprising if it did today, but it is bear Tuesday after all.


FTSE 100 Outlook and Prediction

FTSE 100 daily channels support and resistance
FTSE 100 daily channels support and resistance

I am thinking a dip and rise today, maybe as low as the fib level at 7374, and just above S3 for today. The 2 hour chart is still bearish with the resistance at 7440, but does have a positive coral trend line at 7400 which held well yesterday. That coral line is at 7421 today so we are slightly below that as I am writing this and we do have a bearish 30min chart to start things off. If we do dip initially with a bear Tuesday pattern then there are a few supports of note, though the 7374 level looks pretty strong. I suspect that there will be a few shorters coming in on a break of 7395 today as well.

Generally I am thinking that we will see a rise towards 7460 either today or tomorrow, and possibly even push above 7500 later this week. The markets proved resilient yesterday, bullish almost, and shook off the NK news. The daily chart is still bullish, with support at 7402, and we have both rising 10 day Raff and Bianca channels.

I am thinking that the US will be buying it up later when they return from their holiday yesterday, mainly to show the world that NK wont faze their stock markets. The algos certainly did a good job of keeping the futures prices up yesterday,

So, looking for a bit of a V shaped day today and if the bulls can build on that consolidation yesterday – but they need to break 7435 initially to test 7460.

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18 Comments

  1. Can someone go over the 1 minute RSI strategy rules that people used to talk about here please. I can’t remember the exact entry and exit points. I remember someone saying it worked well but that usually you’d get clobbered during trending days. Thanks

  2. Only àn actual nuclear strike would trip up stocks. its a game of poker. Kim wants a great trade deal and to cement his own position in NK. He may well get it. Either way stocks look good. If US hits pre-empively its good news for stocks. Long.

  3. I’m not sure about strategy rules exactly but set your RSI to RSI 10 with 80 as overbought and 20 as oversold…….think that’s how tmfp had it set up….seems to work well…… Just taken a speculative long at 19.3….

    1. Ps it wasn’t oversold on the 5 min so maybe I should have waited but it seemed to have bottomed out early..

  4. If these strategies actually worked we would all be zillionaires…there are only a couple of strategies that actually work and they have to be played with good risk control…support, resistance, and breakouts. Everything else is bogus, you would have to be really bored….

    1. I have to say CM the RSI is the best indicator in my opinion….even in a trending market it usually shows token respect to it….

  5. Thanks, Anstel. Do you remember when you enter? Do you enter as soon as its over 80 or below 20, or do you wait? Do you recall if this was traded right from the start of the trading day (8AM) or do you wait for the market to settle after the initial flurry?

    1. From memory if the market is very flat the RSI is useless……you have to let the market establish its range and run through at least one cycle….if not in a trending market…….buy when it’s under 20 and sell 80 or higher……from what tmfp said if the RSI is green at 70 ish it’s like a car going down the motorway……if it’s top speed is say 110 mph well it can maintain 90 mph for a long time but only bursts of top speed…so if The RSI is 70 it can hold that level but 80 or above it usually can’t maintain it and it sells off…….nothing is 100% so you will still have losses but it seems pretty good overall…

      1. Thanks. I am getting there. However, you say its useless in a flat market, and its not that effective in trending market, so when is it good? When you say flat do you mean its barely moving? I understand about letting it establish a range. One would naturally assume RSIs would work best in a ranging market. But how long do you allow from 8AM to establish the range? What do you use to determine this range on? Is it the 5 minute chart, 15 minutes?

        Thanks again

        1. Hi when I say useless I mean for example if the market is in a very tight range over an extended period of time the amount of buys and sells are at very similar prices so there is not much oscillation …..once the market breaks out in one direction or another …lets say for eg it rally’s higher it will come to a point where no one wants to buy at that price so the price declines,once it reaches an area where traders are prepared to buy again it with stop descending and go back up……exception to this is if it’s a trending day when it usually keeps going in one direction….let’s assume it’s a ranging market once it’s completed a cycle the RSI is pretty good at showing oversold and overbought conditions…..as for time frames it’ pretty much works the same its just whatever timeframe you like to use…..it’s probably best to start on the daily …4 hourly…. Hourly….15 min……to get an idea of any trends that may forming…….then if you like scalping you can go to the 5 min or 3 min………you have to find out what your comfortable with and your own style…..how much risk you are prepared to take…..what position size suits you…..where to place stops…whether you want to use stops etc etc….There’s no substitute for practise with real money because in my opinion the emotional and psychological side of trading is where it’s won or lost…….buts that’s only my opinion…..only been trading nearly four years and I have a lot to learn….I hope this helps you though…..best of luck……

  6. I’m short.. bearish below the 7440 pivot and no obvious catalysts for another leg higher this week. Bigger picture we’re in a range, with 7440 the top and 7300 the bottom. Above 7440 then 7500s is possible but not expecting that. I didn’t like Fridays price action as 7460 has no significance on the chart, but we’ve formed a double top there on the 5 min and since then broke back below 7440 and held it on backtests. There’s no easy solution to the NK problem, at least not short term. To me, military intervention would be bearish, as would trade sanctions on their trading partners (e.g. China). It just creates uncertainty so the markets won’t like it. The bullish resolution i can see short term is if China pulls the rug on their energy supplies of their own volition.. but that’s not really in their interests yet so a lower probability outcome. Even then, it might back Kim into a corner which could make them an even bigger threat. I don’t think we’re heading for nuclear war but tensions are going to stay elevated for a while and that will weigh on stocks. Was surprised by how well the market held up yesterday, but think it will go down when volume picks up this afternoon with the US returning from holiday

    1. Could be, could be…but the market climbs a wall of worry, dunnit? And then when agreement is reached between the concernied parties…stocks crash. Agree with the price action analysis 🙂

      1. Normally I’d agree if the parties at the negotiating table were rational. E.g. with the EU debt crisis the market sold off quite heavily but was always likely there’d be an agreement. This time though, is Kim going to back down on the nuclear programme without being forced.. would seem at odds with everything we’ve seen so far. There will be a resolution obviously, it’s just how much damage is caused in getting there. Think it takes time so it’s too early to go long the wall of worry.. if we had a correction on the back of this to, say 7100s, then that’s where it would look good betting on the market being overly pessimistic

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