Last week I blogged about the range bound nature of the FTSE. My view was that the market would move aggressively either up or down, once it broke the range 4518 to 4295. This range was duly broken to the downside on the 17th June (see chart below). Since then the FTSE has moved down with the pace of a drunken snail. However, something caught my eye on the chart that may signal further moves South.Firstly, and most importantly a short squeeze fired on the 17th June. This is a significant event for the FTSE. The last time a short squeeze fired (19th Feb) the index went from 4,045 to 3,500 (A significant reduction of 13%). The second point of interest is the high volume day on the 19th June. The market ended up on this day, but the spread on the bar was nothing unusual. This indicates that the bears overpowered the bulls. This is consistent with a weak market. Today the FTSE closed at 4279 - just below the breakout level of 4295. Has this level now become resistance? The probabilities still lie in favour of further moves South. At this point I would tighten my stop to 4400 and look for a profit target using the Fibs (38% retracement is around 4132)
