FTSE: The Long & Short Of It | NXT, UTG, EMG, VSVS
Matt Simpson November 15, 2019 1:49 AM
A look at potential setups for longs and shorts within the FTSE 350 index.
Next CFD/DFT (NXT): Since breaking above key resistance around 6,225, prices rallied to 7,000 and are now gently retracing within a tight, corrective channel. Moreover, the 50-day eMA and 50% retracement level are nearby to act as potential support.
- Bias remains bullish above 6,225, and for a retest and break of 7,000.
- Bulls could look for a break of the retracement line or, for extra confirmation, wait for a break of a swing high such as 6,714.
- Whilst yesterday’s bearish engulfing candle is a slight concern over the near-term, we’re looking for a base to build above 6,225 before its next leg high.
- IWG is another equity consider as part of a similar setup, although price action on Next is more pleasing to the eye (being a higher liquidity stock).
Unite Group CFD/DFT (UTG): The equity is locked in a strong uptrend, outperformed the FTSE and is on the cusp of outperforming its sector this year. After reaching 1180, it confirmed support at 1100, consolidated and is now eyeing up the 1180 highs once more.
- Due to the strength of the underlying trend, the bias is for prices to break to new record highs.
- The monthly R1 sits right on the highs, so this makes a likely target for intraday traders.
- If trading from the daily timeframe, traders may want to wait for a break of 1180 or wait for prices to consolidate/retrace before seeking long setups.
Man Group (EMG): Since the October peak, Man Group has shed just over 20% which places it within a technical bear market. The initial move towards 141 was relatively direct, only pausing slightly ahead of its break of the bullish trendline. Having retraced towards the 20-day eMA and stalling below 152.50 resistance, bearish momentum has returned and its on the cusp of breaking key support.
- The trend remains bearish beneath 151.75.
- A break of 140 brings the 128.35 low into focus for bears.
- Given positive sentiment for stocks ahead of the open (from Kudlow’s trade headlines) then perhaps support will hold this session. Regardless, bearish momentum since October is far more aggressive then the bullish momentum seen between January and October, so a downside break remains the bias.
Vesuvius CFD/DFT (VSVS): Having pulled back to the 61.8% Fibonacci ratio, a swing high has formed and bearish momentum is returning. The peaks are timely and prices are accelerating away from the trendline, so we think the high is likely in. Ultimately, it appears to be an ideal candidate for bearish swing traders.
- The bias remains bearish below 444 and / or beneath the bearish trendline.
- Being a round number, 400 could provide support initially although an eventual downside break is favoured.
- Whilst the bearish trend hold, we could see this head for the lows around 331-335 or even break beneath them.
Price Action Update
Avast CFD/DFT (AVA): Prices have only risen since breaking out of its bullish triangle. However, prices are now consolidating around 440 (right on the monthly R1 pivot) and extended from their averages, so we’d prefer to see a retracement or new level or support form before reconsidering potential longs.
Aveva Group plc CFD/DFT: The bullish trend remains strong and on our radar, having hit and broken through target. Yet just like Avast, its extended from its moving averages more than we’d like and lacks any sort of compression. So we’ll keep a loose eye on it and hopefully it will provide another entry point as we head towards Santa’s rally.Greggs CFD/DFT: Key support held and it opted for the counter-bias by breaking back above the 200-day eMA and rallying higher. We may have seen a breakaway gap after completing a 3-wave correction around 720. If so, it should now head for and break to new highs. At time of writing, 2146 resistance stands in its way – we’re just waiting for prices to consolidate a little more before considering its potential for a breakout.
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