The strong decline on the FTSE over the past few weeks may have come as a surprise to many traders but for us it was expected. It really could not have gone any better for members. I have been warning members for a number of weeks to expect a strong reversal and a crash style move, although we have been preparing for a strong decline; members have also been trading the upside, as before members could trade the downside we need to see the 6900 area tested.
Short term we can count a 5 wave decline from 6904, so that's a positive sign for the bears, currently we are looking for a corrective bounce in 3 waves to end around 6400-6500. Once any corrective bounce and retracement of the prior decline is finished. We are looking for the next leg lower, that move is expected to exceed 6000, if it's as aggressive and bearish as I think it will be, it's going to be a terrific trade and better than the initial decline from 6904. Our risk point at this stage is 6904, which is too large, so we are looking for evidence of the next leg lower.
The key now is the make sure any retracement is in 3 waves, if so then we will be looking to put on shorts and advise members to sell this market, if it's really put in a long term major top we are expecting a serious decline over the next few months and potentially retesting the March 2009 lows again.
As always the long term ideas are subject to revision as a lot can happen between now and a few years out, but as our primary focus is on the short term charts the long term charts usually take care of themselves.
If this style of analysis is the sort of analysis that you are interested in, then I encourage you to check out our site, if you need to know what is going to likely happen before it happens then I think our work can help you, no matter if you are an investor of trader.
Until next time,
Have a profitable week ahead