Start of the year and we could be in for a red candle day with the FTSE selling off overnight and taking another sharp fall this morning at the open. Looking at the higher time frame charts the FTSE is still within the downward sloping channel on the daily, on the hourly the decline has accelerated noticeably as its fallen out of the channel it was previously in.

My initial premise was to get long this morning as the first trading day of the year tends to be bullish, but I hesitated and waited for the market to retrace to the 20EMA, then got short trying to stay in sync with the trend. Closed out the trade for 25 points as the FTSE rallied back up off support, so a good start to the week.

The FTSE traded in relatively narrow range overnight and it’s been the same after the open. Not trading today so have a great weekend and enjoy the new years celebrations.

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.

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.