FTSE 100 Forms Reverse Head and Shoulders Pattern

Market Analysis – July 4

The FTSE 100 index has exhibited a notable chart pattern that may intrigue investors and analysts following the market’s behavior. After a series of attempts to propel upwards, the index has repeatedly retraced back to a significant demand level, outlining what appears to be a reverse head and shoulders pattern, a formation that typically signals a potential bullish reversal following a downtrend.

FTSE 100 Key Levels

Demand Levels: 8220.0, 7930.0, 7800.0
Supply Levels: 8485.00, 8500.0, 9000.0

FTSE 100 Long-Term Trend: Bullish

Analyzing the Moving Average Convergence Divergence (MACD) in May, the MACD line crossed below the signal line, accompanied by diminishing green histogram bars. This technical occurrence suggested a reduction in bullish momentum, coinciding with a dip below the Smoothed Heikin-Ashi Candles—a development warranting caution among bullish stakeholders.

Despite these cautionary signals, the buyers have demonstrated resilience, albeit with limited success, as their attempts to elevate the market valuation have been met with subsequent fallbacks into the established demand zone. The current MACD readings suggest an oversold market condition, with the reverse head and shoulders pattern serving as a battleground for bulls aiming to reassert the primary bullish trend.

FTSE 100 Short-Term Trend: Bullish

Delving into the lower timeframes, we identify the formation of a bullish Change of Character (CHoCH), which is echoed by a bullish convergence in the MACD on these shorter timeframes. This alignment between bullish price action and momentum indicators offers a glint of optimism for market participants eyeing upward movement. Should the bulls manage to establish their position and overcome the pressing selling pressure, targeting the previous highs could be a reasonable objective, with the best forex signals easily indicating potential entry points.

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