FTSE breaks below 100-day moving average for the first time since July 9th
FTSE 100 Index (FTSE) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, FTSE finished the month -4.41% lower at 5897.76 after losing £92.24 (-1.54%) today. Today's close at 5897.76 marks the lowest recorded closing price since May 15th. Trading £56.34 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on June 10th, FTSE lost -3.99% on the following trading day. Closing below Thursday's low at 5924.70, the stock index confirmed its breakout through the previous session low after trading up to £26.94 below it intraday.
Daily Candlestick Chart (FTSE as at Jul 31, 2020):
Friday's trading range has been £148.57 (2.48%), that's far above the last trading month's daily average range of £96.13. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for FTSE.
Two candlestick patterns are matching today's price action, the Bearish Closing Marubozu and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 5843.60 (S1). The index closed below the 100-day moving average at 5939.87 for the first time since July 9th.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 6164.68.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for FTSE 100. Out of 185 times, FTSE closed higher 52.43% 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 63.24% with an average market move of 0.39%.
With four out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are BEL20 losing -2.01% and CAC closing -1.43% lower. On the flipside the best performer has been TECDAX closing 0.42% higher. Read more