After the Tsunami: FTSE 100 Spread Betting Analysis
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If one looks at the price of the FTSE 100 in relation to the Ichimoku Kinko Hyo cloud in the candlestick chart below, it clearly shows that the market is currently in a declining phase. The price is well below the cloud, which indicates that a long position at the present moment cannot be recommended.
The green Chinkou Span line is also well below the price, which supports the signal given by the Ichimoku cloud.
The stock market index started trading below the cloud after the earthquake/tsunami disaster in Japan and closed at a low of 5552.50 on the 16th of March. Since then it has recovered significantly, but during the last few days it has started drifting sideways with no clear direction being evident.
If the market should recover and break through the upper level Senkou Span A line of the cloud, this could indicate that the previous bull market has been restored and that we can expect further price increases.
A drop below the blue Kijun Sen line will, however, be a signal that the downward movement has gained momentum. In that case traders should look at a short position to cash in on a potentially significant price drop.
About the FTSE 100
For readers who are not familiar with the term FTSE 100 - it is simply an index of the 100 largest companies on the London Stock Exchange. The index is maintained and owned jointly by the Financial Times and the London Stock Exchange.
The index came into being on 1 January 1984 with a base value of 1,000. It reached a record level of 6950.6 on 30 December 1999. The financial crisis of 2007 – 2010 saw it drop dramatically to 3,500. Since then it has recovered to a large extent, reaching a high of 6,091.33 on 8 February 2011.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 3 April 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade. Neither InterTrader nor CleanFinancial.com accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
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'After the Tsunami: FTSE 100 Spread Betting Analysis' edited by DB, updated 05-Apr-11
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