The FTSE 100 continued on its downward path, approaching its calculated target at 5100*. Expect some retracement this week, but I would not place much reliance on support at 5100 — strongly suspecting that we will see a test of the June 2010 low at 4800.
* Target calculation: 5600 – ( 6600 – 5600 ) = 5100
The German DAX index has already passed its initial target of 6500 and is headed for a test of 5600.
* Target calculation: 6500 – ( 7600 – 6500 ) = 5400
Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.
The FTSE 100 followed through below 5600 after breaking primary support at 5650, confirming a primary down-trend.
The DAX similarly broke primary support at 7000 on the weekly chart and is now testing its earlier support level at 6500 — breach of that would be the final nail in the coffin. Bearish divergence on 13-week Twiggs Money Flow has been warning of selling pressure for several months.
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