FTSE prediction short term: The FTSE was trading in a tight range yesterday, the weak pound provided some support. I was expecting a pullback but the index was very resilient, it looks like this pullback will occur this morning as the index is lower in pre-open. Sometimes the expected move does not happen when both FTSE and S&P are open at the same time, for example if the S&P futures decline in this morning the FTSE will decline, and if the S&P opens where it closed yesterday this decline in the S&P won’t be recorded on the chart. Yet the decline in the FTSE will be recorded, this decline is wave iv. As it is often the case after a strong rally, people will take profits. Yesterday US investors took profits and the S&P declined further than expected. This decline should be over now.
Manufacturing in China continues to expand but the Caixin services PMI was slightly lower than expected. In the US we saw better than expected jobless claims, the dollar is strong and this means GBP/USD is weak. I think the pound will bounce back for a day or two then it will make a new low.
As noted the FTSE is in wave iv, the rally from 7192 is wave (c) inside wave b (circle). This wave (c) is an impulse wave in five waves [i,ii,iii,iv,v] and the top so far is the top of wave iii. The pullback we are seeing now is wave iv this move should end near current levels. The next move is wave v up, this move will complete wave (c) in five waves and wave b (circle). The target is 7420. Thereafter I expect a large decline which is wave c (circle) down.
FTSE prediction today: the FTSE will probably trade in the range 7350-7400
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