If there ever was a perfect example of technical trading, then the FTSE100 has to be exactly that. I couldn’t have foreseen such perfect technical move’s when I decided to blog about it way back in December but it has gone to signify the power of trading, the potency of technical analysis, the beauty of being able to buy and sell and to highlight some brilliant lessons for trade entry, trade management and trade exit.
The FTSE100 has really given us the complete picture of why every trader (including myself) needs to work hard at becoming a master of technical trading. From way back in December all the way to the current day, we have seen just one asset class single handedly generate over +9%. +3% on the way up and now almost +6% on the way down. As we have seen in the last few trading days, the sell trade has generated a much more aggressive and speedy profit compared to the slow and steady buy trade. I often get asked which direction I have a preference on and that is always to sell as price falls quicker on fear than it does on greed. The phrase I love to illustrate this with is that ”the bull (up trending market) walks up the stairs, whilst the bear (down trending market) jumps out the window”! A phrase that typifies this sort of behaviour in the market perfectly. But irrelevant of my preference on direction, I will take a trade in either direction, so long as the technical clues are present and providing me with strong evidence to take a trade.
The clues we looked for to enter the buy, and then manage it, are exactly the same for the sell trade. We are not having to learn a new set of skills. We just keep applying the same analysis over and over again, only taking trades when enough evidence has presented itself to do so. This way, we get better and better at the process over time, and the prize will naturally follow.
So well done to the many of you whom took this trade, January is going to be a very strong month indeed. This trade could run a little further before bouncing, or it may even break the support level. Either way, we will let the charts tell us what to do and act accordingly.
Best wishes for the remainder of the month.