This podcast is brought to you by cantos.com and is subject to the disclaimer at the end of the programme.

Hello and welcome to Cantos Charts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index. Welcome to another lesson in technical analysis and chart reading. As always, this is simply for information and educational purposes only.

Well in this lesson and also the next lesson we're going to take a look at two common markets. We are going to take a look at what the markets are doing right now because this is certainly creating some excitement for some traders and today we're going to take a look at the FTSE 100.

Now the thing is I want to take a look at basic technical analysis skills because I've always kept things simple and we've had some good feedback from that. So we'll take a look at the current price action in the FTSE 100, we'll also take a look at the candlesticks patterns and also what the current trend is doing.

So here we are, FTSE 100, what do we notice straight away? Higher highs and higher lows and that's certainly since the 4,790 low. Now the key question is we're in the month of September and a lot of traders have been sending emails in asking are we going to head lower. In other words, do markets generally trend lower in September and if that's the case, is this a top for the FTSE.

Well let's add the 20 day moving average because that's always useful to have on a chart. What is the market doing at the moment? It's above the 20 day moving average. So there is no signs of bearishness at the moment. That's not to say that the market could suddenly drop sharply lower and of course change the whole picture. But the main thing is that we've broken above the 5,418 level. We've got a higher low at 5,080 and at the moment 5,635 has been the recent high. So if the market is going to continue higher we want to see a break above that 5,635. If the market is going to trade lower, or turn dramatically bearish, we need to see a break before the 5,080. But of course, we want to zoom in to see if we can capture better moves than that.

Now also here we have the parabolic SAR. This is an indictor we often discuss. What do we notice right now? It's interesting because from the recent move towards the upside, right now, as of this week, the parabolic SAR has been broken to the downside. So short-term, this is telling us that we should be a little bit careful on the bullish plays. In other words, we should start looking for short-term bearish moves.

So the market, although it is above its 20 day moving average, a little bit of caution is advised at this level right now.

Now, we had broken below the near term support levels. So as you can see, the market had traded higher, trended lower for three to four days and then headed higher to make that 5,635 high, but, as of recent, we've taken out that short-term support area. So we have a break on short-term support, we have a parabolic SAR which is suggesting that the move should be towards the downside, so for the short-term traders, whether you're trading intraday or even three to five days, we should be looking at a bearish play.

Now if we start breaking below that support area, there's a nice open space which is suggesting that there is probably room for this market to drop considerable amounts lower by maybe 100 to 300 points.

Now the 5,418 would be the first point of area where we would be looking at support and of course, if the market trades below that, then the 5,080 would become the major target.

Now remember, I've always talked about these round numbers. The 5,600 is a key level right now. If we start trading below 5,600, our next target would be 5,050 and of course the 5,000 level is the key level and that's the major numbers. But below the 5,635, the nearest round number we want to look for is the 5,500 because we are also trading the short-term round numbers, not just the big term.

So here we have a weekly chart and this is a candlesticks chart right now. So what is this telling us? We have a spinning top and this is something we've discussed in previous lessons. A spinning top is usually indecision. In other words, the markets are trying to be bullish, it's trying to be bearish, it doesn't know which way to go, so the open and the close is going to be pretty much at or near the same price. So this week is quite important. If we get this spinning top pattern staying where it is, next week, if we break above, that would be a bullish sign; if we break below this week's trading range, that's your cue to say for the intermediate term the markets could be heading lower.

So the parabolic on the weekly charts that's still bullish so we don't want to be overly bearish. As I said, I know the 5,000 is a key level a lot of people have been talking about, but let's watch the intermediate term psychological numbers. So the 5,500 is my downside target. That's where I would be focusing on for the next week or so.

Now of course the 20 day moving average is also one that you want to have on your weekly chart as well, so that's also bullish.

So, to sum this up, we've got an intermediate term bullish on the weekly chart, we've got an intermediate term bullish on the weekly chart supported by the moving average as well as the parabolic SAR. But short-term, on the daily chart, the parabolic SAR has turned bearish and of course, we've broken the short-term support.

So if you're unsure about this, of course, this is the time to just step on the sidelines and maybe wait for some further cues or for further information from the markets. But short-term, it's looking bearish and the long-term it is still bullish.

So of course, use the higher timeframes. That's the weekly charts. Is the market bullish or bearish on the weekly charts? Right now it's bullish. Trade with a lower term timeframe and that's the daily charts. That of course is bearish right now. And of course, pay attention to the important support and resistance levels. That's the round numbers, previous support levels and previous resistance levels as well and the parabolic SAR, as always, is a really useful tool, so keep an eye on that.

I hope this lesson has been useful to you. I look forward to seeing you in the next lesson. In the meantime, have a great trading week. This is Sandy Jadeja for Cantos Charts Masterclass.

Copyright in this podcast is owned by cantos.com. The views expressed in this programme are those of the individual contributors. Cantos gives no warranty or representation of any kind regarding the information contained. Cantos accepts no liability whatsoever for any loss or damage arising from any action taken or refrained from as a result of any information contained in this programme. Past share performance cannot be relied on as a guide to future performance.