Friday, October 29, 2010

FTSE Has Topped

I believe the London FTSE index has put in a top. We have the break of a short term trendline, a negative divergence MACD sell signal, the RSI breaking down, and a completed ending diagonal triangle pattern at the October 25 high.

There is support at the rising trendline and at least a sharp bounce would be expected from that level if not an attempt at new highs. There is also support at the August high. One thing that stands out is the near equality of the price rise in the July/August rally versus the September/October rally. If the September/October rally were a 3rd wave, we would expect a greater price advance. The FTSE has led the US markets by a few days this year, so I think we can look to the action in that index to help us discern what to expect as the support levels are approached.

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