On Wednesday, I outlined my thoughts on the technical position of the FTSE. It had made a new high and was backing off that high while travelling along my solid tramline pair.
This morning, the market is at an interesting juncture. I therefore thought I would follow up on Wednesday's analysis.This was the picture on Wednesday:
The nature of the move off the 6,818 high suggested a corrective move, not a new downtrend yet. This move consists of several highly-overlapping waves. And it is the deep penetration of each wave into the area of the previous wave that gives the game away.
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That is why I suggested that the odds slightly favoured a move up out of the tramline pair, rather than down.
To cancel this assessment, I would need to see a sharp move down into new lows. That has not happened (yet).
Will the market break through my tramline?
Late on Wednesday, the market rallied to the upper line and made another hit. But then it was knocked down again.
This shows the power of tramlines upper tramlines represent strong resistance to rallies.
So the market decided to keep trading between the tramlines and no trading signal was flashed. Generally, when the market is trading between your tramlines, no new positions are indicated.
But then, the market girded up its loins. And this morning it is knocking on the door of the upper tramline again.
Will it break through this time? And if it does, will the break be a head fake or a genuine move into new highs above 6,918?
The fact of the matter is, with six touch points on my upper tramline any break is sure to be significant.
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