Trading the Line

The Battle for 2000 starts and a Bear market warning occurs as the market punches effortlessly through the 200 simple moving average at 2021. The 200 MA is a benchmark Bull/Bear line in the sand.

We may try to rally here, but the Target now looks even like more likely to be 1935-40, corresponding neatly with the early February high.

With such a fast and violent move it will take some time to stabilise, and this also has an adverse affect upon the signals being generated by price alone.

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Expect some volatile days ahead as the brexit shockwave is processed into the marketplace.
There may well be a hangover caused by the currency crash.

Short-term bounce is likely due to the high Arms reading (2.06), but we are likely to test 2000 either before or after the first bounce.

It may take a few weeks to establish a new low and 25th July looks like a target date for that at present.

OK so we now know the news.

But firstly, yesterday the market was confident of a remain vote and the chart is suggesting that the move today would end in a turn either at 2140 on the upside or at 2000 on the downside, note the black markers on the MOB's.

Interestingly, a small price T structure of the recent move says its done. Note the extremely high Skew showing that the market was prepping for a wobbley (that of course wouln't have happened if the vote went the other way.)

So now we are looking for the low, Futures traded somewhere near 2000 after the vote announcement in early UK trading, and have recovered somewhat since then. That shows significant support at 2000 so keep an eye there if we continue the selling in the next days.

Volatility should remain high for the short term, and the battle of the 200 day MA resumes.

Another 'failure' to move beyond 2100 as we wait for the Brexit vote.
Notice that the bollingers are squeezing tight, indication that an outsized move is in preparation.
I suspect we may see a quick move in one direction followed by its reversal.
A fake out shake out.
Still on a BUY with a tight stop, keep a close eye on the rising Gann support line.

Still on a sell signal but nothing decisive sticking out except the warning of a high SKEW.
This means that if the market reacts badly to news this week then a 160 point move is possible.

A long spike recovery at what may be the end of a small T structure.
Ideally we need to see some strength above 2090 to be convinced of a recovery though.

* We haven't seen SKEW at this level since New Year – increased perceived risk of a Black Swan event ie Brexit

Support at 2066 held firm, but for how long I wonder?