FTSE trading: possible move to 7350

FTSE trading

FTSE trading: The rally is in its final leg up, the Top 20 Differential is overbought and the pattern can be counted as an impulse wave or a double zigzag nearing an end. It is not recommended to be heavily long at this stage but there is still potential for a move to 7350 in the short term. The US markets were shut yesterday, the S&P appears to be in a fifth wave up. The pound was rallying yesterday, the high was 1.2482 which is near the upper line:

 

 

The pound is now pulling back, the question is, was 1.2482 the top of wave (e)? This is important because if it is the top the pound will fall hard and this will affect FTSE trading (FTSE will rally). A triangle is a pause in the downtrend, triangles are in five waves [(a),(b),(c),(d),(e)] and when wave (e) is complete the decline will resume. The more likely scenario is a push to the upper line at 1.2490 before the decline resumes.

If the FTSE is tracing out an upward double zigzag, the first zigzag [(a),(b),(c)] ended at 7313.5. The decline to 7253 was wave (x), yesterday’s rally to 7329.5 was wave (a) of the second zigzag. The current pullback is wave (b), this wave is either over or it will end near 7270. The next move is wave (c) up to 7350. As you can see the potential rally to 7350 should be accompanied by a fall in GBP/USD (after completing wave (e)), however I believe the decline in GBP/USD has a long way to go (1.2200?) and the S&P should go down as well, this means the benefits from the lower pound should be offset by the declining S&P. This means the FTSE could be stuck in a range near 7350 for a while. Or the FTSE will decline with the S&P but it will outperform the S&P due the weak pound. Obviously if I am wrong on the direction of the pound and GBP/USD rallies, the FTSE will fall hard with the S&P. All this action should occur after the final move up to 7350.

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