ShareCrazy.com

I started calling for a big fall back in June 2007 just before FTSE's first peak around 6,750 and I plan to continue to provide updates as this decline continues. I expect that this will be for some time to come.

The chart below shows my preferred wave count of FTSE at this point:

chart1

The A-B-C form of the first big fall. This fall took FTSE down 1,413 points - 20.9%.
The A-B-C form to the subsequent rally. A rally which looks extremely corrective.
Resistance is at 6180 where waves A and C would be equal.
There is also key resistance around 6,250
The 50% retracement level is at 6,099 which also marks the peak of wave A.
The 61.8% retracement level is at 6,210.

Overall I would expect the wave C peak to take out the peak seen by wave A at 6,104 and it is for this reason that my target for final peak is between 6,180/6,250.

But on Friday 11th April, FTSE saw a sharp reversal which looks like this:

chart 2

The worrying factor here is that FTSE made a new high at 6,016 and then saw a five-wave decline.

The significance of this is that a five-wave move, in terms of the Elliott Wave Theory, signifies a trend change - meaning DOWN.

For now I suspect that this is a false signal because:

Wave C has yet to exceed the high of wave A.
We have options expiry on Friday 18th April and the big moves usually come in after expiry.
The decline, so far, on the Dow looks corrective (see chart 3 below).
The pattern shown on chart 2 can be counted as an expanding triangle

But none of these are mandatory and this needs careful watching. Particularly so as I continue to count this as Phase II of the big bad bear market which is a news-driven phase making it less predictable.

It is, as ever, what comes next that will give us the clue and if FTSE can only rally weakly off Friday's low - WATCH OUT!

Here is a chart on the Dow:

chart 3

CONCLUSION

It looks to me like we have not yet seen the high of this corrective rally but it may be close and I expect options expiry on 18th April to be pivotal as it was pivotal when I first made a call for big falls back in June 2007!

My job at www.JohnPipersTrading.com is to tell you what is going to happen next. To make all the big calls on Indices. I do give tips, as it is what the market wants, but the main purpose of www.JohnPipersTrading.com is to help you develop your trading skills. Give a man a tip and you may feed him for a while, teach him how to trade and he is set up for life. I will be monitoring this situation on this service.

It goes without saying, or at least it should, that you must control risk on any trade you take. You might prefer to use stops or adopt a different approach. But if it goes wrong get out. Trading is a matter of probability. Traders win because they make more money on their winners than they lose on their losers. So make sure that however much you risk is relatively small compared to the amounts you might win. We all have a different way of approaching markets and we will all employ risk control differently.

To sign up with John Piper for 2 market calls a day plus ALL the BIG CALLS click HERE

BTW I do give tips, as it is what the market wants, but the main purpose of www.JohnPipersTrading.com is to help you develop your trading skills. Give a man a tip and you may feed him for a while, teach him how to trade and he is set up for life. I will be monitoring this situation twice a day on this service.

For a recent issue of The Technical Trader click here - http://www.johnpiperstrading.com/media/tttfeb08.pdf

Any comments? email john@ttttt.freeserve.co.uk

Every morning at 10 AM sharp, John Piper publishes a report with the latest movements on major markets and indices and mails it out to members JohnPipersTrading.com. Click here to sign up for JohnPipersTrading.com now.