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FTSE100 – Technical patterns ahead of EU referendum

FX:UK100   The FTSE 100 Index
The above chart may look scary at first sight, but go through the explanation below and things would look easy.
The daily chart shows three major technical formations

  • Inverse head and shoulder – right shoulder is in progress. The neckline comes around 6400
  • Head and shoulder – neckline has been breached, index currently flirting with same. Given the difference between shoulder high and the day when neckline was breached is about 400 points, the breakout could translate into a drop to 5633 levels.
  • Bat pattern – Leg D (88.6% of XA) is in the making. Note, the 88.6% stands at 5601, which pretty much is the head and shoulder breakout target.

From the above chart it is pretty much clear; the range of 5600-5633 could be a potential reversal zone (Leg D of Bat pattern & also the head and shoulder level).

A break lower could result in a further losses towards 5200 levels. A reversal from near 5600 levels could see prices complete inverse head and shoulder formation.
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