FTSE dominated by bears dragging the market lower throughout the day
FTSE 100 Index (FTSE) Technical Analysis Report for Dec 03, 2019 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, FTSE ended Tuesday at 7158.76 tanking £127.14 (-1.75%). This is the biggest single-day loss in over two months. Today's close at 7158.76 marks the lowest recorded closing price since October 18th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 7277.00, the market confirmed its breakout through the previous session low after trading up to £142.07 below it intraday.
Daily Candlestick Chart (FTSE as at Dec 03, 2019):
Tuesday's trading range has been £151.01 (2.07%), that's far above the last trading month's daily average range of £73.51. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for FTSE.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 7134.93 earlier during the day, the stock index bounced off the key technical support level at 7149.80 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on November 28th, FTSE actually lost -0.94% on the following trading day. Prices broke below the key technical support level at 7245.20 (now R1), which is likely to act as resistance going forward.
Crossing below the lower Bollinger Band for the first time since October 3rd, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 7334.97 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "4 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for FTSE 100. Out of 65 times, FTSE closed higher 58.46% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 64.62% with an average market move of 0.73%.
With three out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are CAC losing -1.03% and N100 closing -0.86% lower. On the flipside the best performers have been TECDAX closing 0.44% higher and DAX gaining 0.19%. Read more