There seems to be another instance of my FTSE peak signal pattern emerging (rather sooner than I anticipated in my last post), with three dips close together around the 20 day moving average (the green line). For it to complete, the index needs to bounce back over the 20dma for a final peak, then I would expect it to fall back to the 6000 – 5800 area. I suspect the final peak will be quite small and the subsequent decline quite sharp, looking at previous instances of the pattern, but it is difficult to predict.
The Dow has fallen quite sharply in the last few days over renewed worries about the “taper”. It is now well below its bollinger band, which suggests a bounce would be in order, so I am optimistic about the FTSE doing the same.
