Hello, welcome to CantosCharts Masterclass. I'm Sandy Jadeja, Chief Technical Analyst for City Index.

Well of course the markets have been extremely volatile and here at Cantos we've been keeping a very close eye on key levels. Now you will remember in the last episode we did talk about the FTSE100 pretty much breaking down and so I really want to focus on that market right now today.

Well as always, this is simply for information and educational purposes only. So we'll talk about the FTSE100 in detail and we'll cover through various timeframes.

First of all, take a look at the monthly chart. Now this is the chart that we previously looked at, so if you want to learn a little more about this, refer back to last week's video.

The first thing I pointed out to you is that the monthly chart had now been trading below its 20 period moving average and that's, on a short-term basis, not a good sign. But also we had momentum dropping off on the monthly chart, so there were several clues really to pointing out for the traders to say something is not right.

Now currently, we are looking at this particular monthly chart here where we can see the ABC pattern which we can now confirm has been completed. So what does that mean?

Well on the longer term charts, this would suggest that we are probably going to enter a major bear phase. Now we need to keep a very close eye on this market because to get out of this bear phase here the FTSE100 really needs to clear 5100. It's looking unlikely at the moment. But you can never tell what's round the corner given the current volatility.

We also pointed out that we were looking at 4,780, 4,781 as the downside target and so far the FTSE has hit 4,791, so we were very close on that target there.

If that target doesn't hold, it's not good news. The FTSE could pretty much go down to 4,469, so that's quite a way. I don't think it is going to happen right now. I think we're going to see a relief rally towards the upside and therefore, we'll take a look at the weekly charts.

Now previously, we pointed out also that there was on the weekly chart this declining momentum. So whilst prices were stabilising on the upside, momentum was waiving to the downside, so that was another clue to say we're pretty much heading lower.

So right now you can see the index has reached our target. Momentum has really fallen off. Some traders will come in and say this is oversold. I think we've really got to be careful when we say oversold because given the current volatility, these markets have been oversold at 500 points away, so what do we expect right now?

My expectation is that the FTSE is probably going to start rallying and the key levels to watch out for is 5,291 to 5,604. The FTSE needs to get above 5,291 in order to prove that the low, at least short-term is in and then we could head for that 5,604 area which pretty much coincides where the previous bottoms are as well. So the previous bottoms which were support is now probably going to turn into resistance levels here.

Now if we look at the daily chart, very dramatic as you can see both on the weekly chart and on a daily chart. So we broke through the parabolic SAR. That was giving you extra clues to say that this is really getting nasty and it's heading towards the downside.

Now, if we take a look at the daily chart, we can see there is a very important candlestick pattern which has just taken place. It's a hammer and that's suggesting that the prices have been hammered out towards the bottom. We are probably going to be looking for a reversal. My expectations are we're going to see some very choppy price action here. You probably might see a few hours up and then a few hours down. You need to learn to live with this volatility. But the key factor is that we've got to get above some key levels here in order to get towards that 5,600. If we don't get to 5,600, the 5,500 area is also a key area on a daily chart.

So right now trade with the volatility. There are some very good short-term opportunities getting in and out of the markets on, say, the hourly charts or even the four hourly charts. Try not to panic. Of course, it's very difficult times for many investors holding onto these long-term investments, so for trading purposes, these are good times when we see this kind of volatility.

So always use the intermediate term and the longer term timeframes to give you the overall direction and that, at the moment, is clearly bearish.

So we are looking for any rallies for shorting opportunities and then the indicators of course are bearish on the long-term as well as the short-term timeframes, although on a short-term timeframe it's now looking to become oversold but I wouldn't really classify that as a useful term.

Look for clear reversal signs and I use candlesticks for the clear reversal and of course use protective stops. Now stops obviously are going to be wider. You can use the average true range function which is telling you want the average daily range is and so if the average daily range is say 250, then that's where you want your stops.

Here at Cantos we're going to keep a very close eye on these charts. I look forward to seeing you in the next video. In the meantime, have a safe trading week. This is Sandy Jadeja for CantosCharts Masterclass.