The London FTSE ($FTSE) has an expanding right triangle working over the last 7-8 months. These are akin to broadening formations, which are also bearish reversal patterns. After an advance from 3500 in March-09 to 5250 in October-09, the index moved into a volatile consolidation period. Notice the higher highs and relatively equal lows. It was a volatility and uncertain period. The pattern would be confirmed with a break below support around 5000. Such a move would also break the 52-week moving average for the first time since July 2009. Upon a confirmation break, the downside target would be the next support level around 4500, or another 10% lower. The indicator window shows RSI hitting the 40-50 support zone for the third time in a year. Momentum remains bullish as long as RSI holds this zone. A break below 40 would turn momentum bearish and could be used to confirm a support break at 5000.
Click this image for details
Click this image for details
