LAST WEEK trading plan :
Last week bring us many mixed signals. Index start positive with strong rally, reach test zone 11800+ but fail to support further gains on pullback and collapse under breakout point, to near lows zone.
We had mix of hope fuel by earnings season but suppressed by lack of closure on important problems worrying investors in EU.
Negotiation between UK and EU stuck and don’t looks like we will have any progress soon enough.
Italy facing tough clash with EU commission over deficit and draft of budget. Italian bonds yields reach another high and weighed stocks lower.
However Index did pretty well in this situation and set new weekly higher low, that suggest as investors not give up completely just position them selves cautiously and trading safe.
Building base for proper rally take time and is no surprise as price coming back near lows.
Buyers will be trying deliver positions saved on lows above 11850 resistance. That is zone where some trouble can start but successful breakout can help push price above 12k mark.
Targets: 11880 and on successful breakout 12050/150 up to top of channel marked on chart.
Will be trying to cap rally again this time from about 11660 or 11730 mark to break last week lows 11400, this will open path towards lower trend line of channel.
Current sellers foothold is 11730 and important point 11850. Sellers will be far from give up, even with price get back above 12k mark, another sell zone over there.
Targets: 11380/325 and on successful breakout 11150/10830
Long term trend correction:
Before we get suck in to buying on hype or get to conclusions as Index is cheap lets keep in mind price only get under Fibonacci 38.2 (11730) retrace level of long term trend started early 2017. That level is still seen as shallow correction.
That correction easily can reach 50 level which is about 11150 and ultimate test at 61.8 around 10500.
This push under 38.2 can get saved and will end as buy dip opportunity but not easy job to get done as declined once on that attempt.
Lets keep eye on that zone – 11730
Market profile chart:
Analyse of last week distribution shows good coverage around current lows. This can provide base for move either above 11850 or under lows.
We can determinate demand under and just above 11500 and supply above 11700.
Shorts cluster at 11800-840
Key points resistance and supports: