Technical Analysis of Financial Markets

Wednesday, June 14, 2006

FTSE 100: End of Bull-Market 20/03/2003 to 13/06/2006 ?

"Operation Iraqi Freedom", the invasion of Iraq began on 20/03/2003. The following morning the FTSE (including other major global indices) dipped to the lowest point of the dotcom-crash and 911 bear-market and then bounced some 6% beginning a bull-market trend reversal. The trend reversal has been intact and in a consistent uptrend ever since--until today 13/06/2006. The uptrend which had lasted 1180 days tested the trendline 6 times and managed to rebound off it successfully. However, today, on the 1181st day of the uptrend, the FTSE has broken and closed beneath it. Closing below 5500 is more than a 10% correction. A weekly close below this major bull-market trendline signifies a trend reversal as “old support becomes new resistance”. Retracements back up to the trendline (now resistance) should provide good short entry positions. A 20% decline is widely seen as a bear-market and would equate to the 5000-level on the FTSE 100.

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