FTSE 100 top confirmed at 6,904.85
The break below the ending diagonal support-line, has confirmed the top at 6,904.85 and we should now be looking for a decline to the origin of the ending diagonal at 6,023.44, within half the time it took to build the formation. As it took 62 weeks to build the ending diagonal, we should expect a test of 6,023.44 no later than mid-April 2015.
More importantly, the top at 6,904.85 marked the top of the major corrective (B) wave from early March 2009 and we should now be looking for an impulsive decline in wave (C) lower to 3,461 in a major flat correction.
This is the third time the FTSE 100 index tops out near 6,900. In 2000 it topped at 6,935, in 2007 it topped out at 6,751 and now in 2014 at 6,904.85. Every top with a 7 year span. If we look at the bottoms, we can see that it bottomed in March 2003 at 3,278 and again in March 2009 at 3,765. If this sequence should continue, that will mean a bottom in March 2015... I do think a decline of that magnitude is unlikely in that short time frame and think it's more likely, that we will see a bottom in March 2016, but now we at least have an idea of the risk-scenario.
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