FTSE outperforms Europe, +10% since local low! Is 5th wave done?

The UK 100 (FTSE) is outperforming its European counterparts by a wide margin, hovering just shy of the 11,000 record high. Despite the chaos of geopolitical tensions and expectations of rate hikes by the BOE, the index remains heavily supported. We break down the unique fundamentals driving this strength and dive into the Elliott Wave structure to predict the next major move.

Key topics covered

- Failing truce: The US-Iran ceasefire holds, but Israel's bombardment of Lebanon and the ongoing closure of the Strait of Hormuz are driving up oil and food prices. This is a "bad recipe" that could force the Bank of England to hike rates this year.

- Why FTSE outperforming: Despite the hawkish rate outlook, the FTSE is 10% above its recent low due to its exposure to energy giants (BP, Shell) benefiting from tight oil markets, and a strong pillar of support from utility stocks.

- EW & Fibos: The rally from the March 23rd bottom (9,680) appears to be a clear 5-wave impulsive structure. We are currently trying to determine if the 5th wave is already complete (which would trigger a major macro correction) or if we are simply in a Wave 4 correction before one final push higher.

UK100 scenarios & trade plan:

• Bullish (The Wave 5 Push): We are currently finding resistance at the 78.6% Fibonacci retracement, but importantly, holding support above the 61.8% Fib.
  
• Setup: As long as the index holds above the 61.8% Fib (and the psychological 10,300 level), the technicals point to further upside.
  
• Targets: Bulls will aggressively target a reclaim of the high-momentum liquidity sweep at 10,800. Clearing that supply opens the door for new all-time highs.

Bearish (Wave 4 correction): Looking at the 4-hour channel, Wave 4 might not be finished.

• Setup: If we lose the 61.8% Fib support, expect a deeper correction down to the middle of the channel, potentially testing the 50% Fibonacci retracement.
  
• Big picture: If the 5th wave has actually already topped out, we will see a much deeper macro correction before any new 5-wave impulse to the upside can begin.

Are you buying the dip for a Wave 5 push or waiting for a deeper correction? Share your thoughts in the comments.

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