FTSE London Daily Chart; H&S Pattern Developing

The footsie runs higher with the rest of Europe last week on the ECB QE stimulus joy. Price is above the upper standard deviation band for three consecutive days and needs to return to earth. The red lines show the negative divergence as October began so you knew, along with the rising wedge and overbot conditions, that a smack down was on the come, and it occurs, forming the head of a potential H&S. Price has near-term momo so it will be interesting to see if it can make a run at the important 7100 level, or not.

The blue lines show a head and shoulders (H&S) pattern in play. The head is 7100 and the neck line is 6700. Thus, the downside target is 6300 if the 6700 level fails (6700-400). The Brexit vote has not impacted stocks; that occurred late June and the stock market has catapulted higher ever since. This has occurred since the minute the Brexit vote occurred, BOE Governor Carney ran to a microphone promising more stimulus for as far as the eye could see. Stocks rallied on the Bank of England easy money joy and never looked back. The central bankers are the market.

Brexit realities may set in as the weeks play out. The cold winter winds are beginning to blow. If the FTSE loses the neckline at 6700, Britain will be toast. London will hold a parade for the market bulls if price moves above 7100. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.