FTSE 100 Index Is an Index of 100 Blue Chip stocks on the London Stock Exchange commonly referred to as the FTSE.
The Index is not part of a stock exchange and jointly owned by the London Stock Exchange and the Financial Times.
The index is in a “down trend” how do I know that? The EMA 200 is on top, the MA20 is in the middle and MA8 is at the bottom.
So where do we enter a “short” trade. Take note that by the yellow ball (added marker) the Bollinger bands gets spiked by the price indicating an “over bought” situation.
The trend is down, the SAR indicator is indicating a “shorting” point, do you place a trade?… no, always remember that even though we have an over bought situation and a down trend, your trade entry point must always be after a bearish candle has closed below the MA8 and RSI is in bearish territory.
Let me take you a slightly different arena known as "SIP" trading
A SIP or simply a “shift in psychology” is a clear indication that the power of the price move is likely to continue in SIP direction – don’t just jump on the “bandwagon” and place a blind FTSE trade.
We must have confirmation that this is a high probability major move and that the“buying or selling” is about to take off. So what do we look for before we place our money against the market?
For a” long” trade with a confirmed SIP, the EMA200 must be below the other two moving averages, the order of the lower two moving averages is irrelevant, the RSI also must be in the bearish territory.
A Bollinger spike or tag prior to the SIP would be a preferred and valid confirmation of the move but is not an absolute must.
DO NOT ATTEMPT TO TRADE A SIP IF IT HAS APPEARED IN THE MIDDLE OF AN EXISTING TREND – THIS COULD BE AN EXAUSTION PART OF THE TREND RATHER THAN A GENUINE “SIP”.
ESPECIALLY IF THE SIP HAS SPIKED A BOLLINGER BAND, MOVE THE STOP LOSS TO LOCK IN PROFITS OR TO BREAK EVEN POINT.
