The FTSE traded in a very narrow range overnight, pretty much hugging the 6300 level, and it was only at the open that it declined sharply. Note the little spike up to clear overnight stops (typical turtle soup or stop raid pattern) prior to the drop.

Looking at the higher timeframe charts I noticed that the FTSE was at the top of a declining channel which technically, may have explained the drop away from 6300. I only managed one trade which was off the previous day support at around 6265 and closed that out for 8 points.

The FTSE 100 index traded in an upward sloping channel which slowly pushed lifted it past the 6300 level late this afternoon. After closing out the third trade from this morning for a handful of points, I placed two more trades which were both based on MACD divergence setups. The first was closed out for a healthy profit and the second, a counter-trend trade, was closed out for a small loss.

Normal trading resumed after the Christmas holiday period and I expected the market to push up this morning given the overnight strength. We had a quick dip to support at the open before the FTSE shot up towards the 6300 level.

However, I ended up shorting the market following the MACD divergence as shown in the chart, and closed out for a couple of points as the market reversed off support following the hammer bar formation. The other two trades were textbook trades off key support and resistance levels.

It was one of those days where you would have been profitable just trading the divergence between price and the MACD histogram bars. The first trade would have been a loss or possibly a scratch trade if you played it tight, with the other three trades ending up as winners in my book. Note that A, B & C were class-A divergence patterns, and D a class-B setup, as indicated on the chart below.