A profitable end to my FTSE trade

Last time I left you in suspense with my FTSE trade

The market had completed the move to my initial target at my lower tramline and had just broken chart support at 5,955. So far, so good.

But late last night, the market failed to continue the decline and instead rallied, albeit from oversold momentum readings.

That gave me pause to believe that the market could stage a relief rally, rather than continue its way down right away.

I had thought of adding to positions, but I will decline for now. I will just see what the market produces the next morning.

I decided to keep my protect-profit stop at 6,005 overnight.

Friday 7:45am  I see the market has bounced off the congestion zone surrounding the 5,990 area and is drifting lower.

Here is the hourly chart:

FTSE100 spread betting chart

(Click on the chart for a larger version)

The overnight rally has carried to the Fibonacci 50% retrace of the move down and is backing off.

But when I go to my 30-minute chart, I see that this morning’s dip has carried to the Fibonacci 62% retrace of the overnight rally.

FTSE100 spread betting chart

(Click on the chart for a larger version)

It is always a good idea to apply the Fibonacci tool (available on your spread betting platform) to the various waves that the market makes, especially to the most recent ones. The retracement levels can often give you points of support or resistance in advance.

2:45pm  The rest of the trading day could be a little wild and woolly as we move into the close.

This is Friday – and also stock index options expiration day. Many traders square their books and of course, adjustments are made for the options expiring.

All in all, I think I will pocket my profit and take a look next week.

I hope this has helped you to understand a bit better how using Fibonacci, Elliott wave and tramlines actually works when you’re involved in a trade.

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