Elliot Wave Analysis for UK100
FTSE 100 is the stock market index of the United Kingdom consisting of the 100 largest listed companies, based on their market capitalization. It was introduced in 1984, belonging to the FTSE Group, which in turn is a subsidiary of the London Stock Exchange Group. The ‘’mother’’ group has been launched in 1801.
The categories of the industries contained within the index are banking, real estate investments, financial services, life insurance, mining, aerospace, software services, energy, pharmaceuticals and biotechnology, chemicals, construction, and many more.
The FTSE 100 now is traded at 7597 points, almost near its high value at 7903 in May 2018, justified by the fact that during the ‘’Brexit’’ and along with the crisis of the pandemic in 2020, it rallied from the 4898.79 points low.
Monthly Range: Higher in wave ((3)) of V
What we can see from the monthly trading chart (log scale), is that the index has ended the III and IV Cycle waves and is moving towards the V of the same degree wave. As we all know, the fourth waves usually build sideways corrective patterns, and indeed here the UK100 has formed a nice regular flat as the IV Cycle wave. Having said about regular flat, just to remind you that, when the second wave of a corrective formation is almost or at the starting point of the previous first wave, and simultaneously the third wave of the same degree cannot exceed the end of the first wave, then the pattern called a regular flat.
Thereinafter, the market moved higher making initially shallow retracements, so before the pandemic crisis in 2020, we estimate that the first leg is a ((1)) Primary wave, and the decline afterward labeled as the ((2)) Primary wave. However, the index was able to find strength making an upward pullback near the all-time highs, as we mentioned previously.
Weekly Range: Higher in wave ((3)) of V
In more detail, we can observe closer from the weekly trading chart (log scale), the subdivision of the ((2)) Primary wave. It was a zig-zag correction, that consisted of an (A) – (B) – (C) structure of Intermediate waves, in which the (B) was a contracting triangle and the (C) had twice price relationship with that of (A).
According to our basic scenario which is the uptrend, so far, the UK100 rallied up to the 7687 points, having fluctuations till there, giving us the way to count it deeply. In this weekly chart, it seems that the index has made 3 or 5 waves ahead. But the daily graph will show exactly what is happening now.
Daily Range: Higher in wave 5 of (1)
The daily trading chart (log scale) above is showing, that the rally was a 5-wave sequence movement. Thus, the index or it has completed the (1) Intermediate wave or is about to complete it. The (1) Intermediate wave has subdivided into five Minor degree waves, 1, 2, 3,4, and 5. Because of not exceeding the end of the ((1)) Primary, we cannot say that the ((2)) Primary has finished, unless the market makes a new all-time high.
That being said, or the 5 of the (1) Intermediate degree hasn’t ended yet, to move to new highs and then we will definitely be sure about the completion of the ((2)), or we are still within the ((2)) corrective wave and the market wants to construct a flat, regular or expanded. We didn’t say a triangle because, according to the Elliot wave Principle, the second waves cannot form triangles, only zig-zags or any flat or double or triple three.
In the case of the ((2)) being flat, then the whole ((2)), would be only the first leg of the flat, as of (A) International wave, subdivided by an A – B – C Minor degree waves as a zig-zag, the 5-wave sequence that we counted for the (1) Intermediate should have been replaced with the second leg of the flat, as of (B) Intermediate wave, subdivided by an again upward now A – B – C Minor degree waves as a zig-zag, and after that, it would be expected the final (C) intermediate wave subdivided by 1-2-3-4-5 Minor degree waves, which maybe will end up beyond or not the 4898,79 points.
In conclusion, our market forecast remains positive for UK100, where regarding the uptrend basic scenario the ((3)) Primary, could easily approach the 13300 points – 123,6% of ((1)) based on the end of ((2)) -, but always be careful of any retracement before taking any risk with you.
See More Analysis For Global Indices Section 1: https://tradezign.com/category/section-1