FTSE 100 Daily Candle Chart

A look at the chart for the FTSE 100 reveals several interesting details following Friday’s close in London. First, note the volume which is falling as the index is moving higher – always a bad sign, and for those of you who have studied volume spread analysis, will know exactly why, but in simple terms if a stock ( or an index ) is moving higher on falling volume, then the market makers are simply marking the market up, and not taking part in the move themselves. This indicates that they are likely to move the market lower in the short term. The second important point to note from the daily chart is that the opening on Friday was gapped up, and closed with a spinning top candle. If this is confirmed on Monday with a move lower, then we will have a morning star pattern, an excellent signal of a reversal in the move up. If you are confident, then I would suggest a short position on Monday, for those less brave I would suggest waiting until Tuesday. If the FTSE 100 falls on Monday, then we could have an evening star candle pattern and a strong signal of a short term reversal. I would suggest a stop loss position somewhere around the 3.9450 region.

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