Hello. Welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index and welcome back to another lesson in technical analysis and market reviews. As always, these are simply for information and educational purposes only.

We'll take a look at the FTSE 100. That's pretty much where we left off last time and if you remember, we were looking at the weekly charts.

So at the moment the FTSE 100 has stabilised at the 5,654 level. We had seen a decline towards the 5,594. Of course, the highs were at the 6,100 level and we're expecting one or two things. As you can see, the market is rounding off so this is quite bearish. If the market was fully bearish we would have taken out that 5,594 level which it hasn't actually done just yet, so does that mean that the market has turned bullish?

Well, on the weekly moving average the market still remains below its 20 period moving average. That's bearish. So at the moment any moves towards the upside you would look for a shorting opportunity unless of course the market climbs back above the 20 week moving average.

On the daily chart, on a lower timeframe, as you can see, we are still below the parabolic indicator. That is suggesting that the market still is weak. So yes, the market has stabilised at 5,654. It has moved higher, but we need to watch closely to see if the FTSE is going to break above the daily parabolic indicator. If it does, it doesn't mean this market is bullish because remember that the weekly trend is still down. We would then wait for a signal to look for a short position on the daily chart.

So if we move across to the candlesticks we can see clearly that at the 6,005 there is a bearish engulfing. That took the market down and then at 5,654 we had a hammer pattern followed by a spinning top followed by another hammer which was indicating that there was some point of reversal coming in and then of course we had a nice bullish candlestick towards the upside and right now we have a harami pattern.

So, on the candlesticks charts you can look at these patterns to give you an early warning indicator as to what the market is about to do.

So as this market moves towards its parabolic indicator I would look on the daily chart for a bearish reversal signal just underneath that parabolic indicator to take a short position with the expectation of the move continuing to the downside.

Now of course if that doesn't happen we would negate those signals and we would then wait for two things. Either another short signal or, if the market turns bullish, it would need to do that on the intermediate and the longer term timeframes, which is the weekly charts.

So let's watch out because at the moment the parabolic resistance is coming in at 5,830, so we're very close to the price region, so let's see over the next few days what this market is doing to do and what it is going to tell us. Are we going to see another leg down or are we going to just negate this signal and then continue higher? So it's really important to watch these signals on a shorter term timeframe.

So, what does the intermediate timeframe suggest? It's bearish on the weekly. Are the indicators bullish or bearish on a lower timeframe? So the parabolic is bearish, the moving averages are bearish and wait for clear signals using the candlesticks patterns and of course, always use protective stop losses to protect your positions.

Interesting time in the markets. Let's keep a close eye on this. I look forward to seeing you in the next lesson. In the meantime, have a safe trading week.

This is Sandy Jadeja for CantosCharts Masterclass.