FTSE 100: Odds Favour a Decline From Current Levels

Stock markets rallied near previous highs but so far key resistance levels are intact and yesterday the S&P turned down to close near the previous day low. The FTSE is trading lower, it would appear that the trend has turned down.

It also appears that there is no appetite to push the markets higher, disappointing data coming from China and fear of civil war in Ukraine are taking their toll.  In addition the earnings season is coming to an end, by now all the good news is priced in, and it’s May, another reason to take money off the table.

As you can see there is not much in terms of positive news out there, the only good news came from Europe. Spain and Italy services PMIs beat forecasts, and in the UK the services PMI was better than expected.  For these reason we must be prepared for a change of trend in all equity markets, from up to down.

Today: Sentiment is bullish but not extremely bullish, prices are not yet oversold (RSI above 30), yesterday’s trendline was broken and other indicators like MACD and DMI are bearish.

Next few days: the two moving averages, 55 and 13 on the hourly chart are about to cross over (bearish), MACD and DMI are bearish. Risk of a reversal if the index rallies to previous high (6838).

Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk

FTSE 100	Today	Next few days	Next few weeks
Trend	Down	Down	Down
Action	Sell	Sell	Sell
Trend reversal	50%	50%	50%
	Key Reversal Levels
FTSE 100 cash	above 6838	above 6838	above 6866
FTSE 100 June	above 6808	above 6808	above 682

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