Right then. We closed today with a hammer on the daily chart. This is much more convincing than those from the 4H and hourly charts from yesterday, particularly because this time there was also a repeat of the 4H hammer but this time it followed through and was bought.
I still have a number of concerns about whether this is genuine though. Firstly, it's still barely touched the 50% Fib and after such a strong downtrend and an uncertain move from 141p to 166p I'd still normally have expected a wave 2 to go below the 50% Fib.
Secondly, volume again was weak and it didn't take a lot to push the SP up from 152p where it was trading only seconds before the close. In fact it took less than 10k to move it from 152.5 to 155p.
Thirdly, the candle body is really a bit too large for a true hammer (in fact, had it closed at 152.5p it would have been much more convincing) and it resembles the one from 24th May which was followed by a down day.
Fourthly, hammers are most effective when they appear at a known, significant support. 147p doesn't really seem to fit the bill there, but that on its own doesn't rule this out.
I still have a number of concerns about whether this is genuine though. Firstly, it's still barely touched the 50% Fib and after such a strong downtrend and an uncertain move from 141p to 166p I'd still normally have expected a wave 2 to go below the 50% Fib.
Secondly, volume again was weak and it didn't take a lot to push the SP up from 152p where it was trading only seconds before the close. In fact it took less than 10k to move it from 152.5 to 155p.
Thirdly, the candle body is really a bit too large for a true hammer (in fact, had it closed at 152.5p it would have been much more convincing) and it resembles the one from 24th May which was followed by a down day.
Fourthly, hammers are most effective when they appear at a known, significant support. 147p doesn't really seem to fit the bill there, but that on its own doesn't rule this out.
Finally, the 4H RSI doesn't look anywhere near breaking out of the bearish divergence from the recent high and, moreover, the OBV (on balance volume) on both the 4H and the daily chart above are both trending down. This indicator shows where the balance of money is really going and how little volume created that finish as we saw in point 2.
It'll be interesting to see how this performs tomorrow, not least in light of today's big move up in the US indices and the FTSE's hammer at support.
I'm going to stay neutral on this unless there's a close above that 4H resistance trendline at 161.5p, and preferably a close above 163.5p or even 166p. It's perfectly possibly within EWT (Elliott Wave Theory) for this to get back up to that very short term trendline and still make new lows and even a wave 5 of C. I don't mind buying at a slightly higher price if that comes with a much lower chance of