The FTSE 100 daily rolling futures formed a bullish hammer candle at the lower edge of its mini-range yesterday. But before the bulls get carried away, there are a few cautionary signals to consider.
FTSE 100 Follows the Price Action Playbook So Far in 2025
The FTSE 100 has been a textbook example of price action trading this year, with breakout moves, clean retests, and trending phases that have given traders plenty to work with. January kicked things off with a breakout from key resistance, quickly followed by a classic retest of the broken level. February saw the bulls take charge, pushing the index higher in a strong trending move.
Then came March, when the rally hit a wall at swing resistance. The failure to break through led to a significant retracement, taking the FTSE back down to the volume-weighted average price (VWAP) anchored to the December lows. This pullback set the stage for the next phase: sideways consolidation, with the index settling into a relatively small ‘mini-range’.
However, this week brought a bit of drama. Yesterday’s price action seemed to have broken the mini-range to the downside as market sentiment soured over Donald Trump’s impending tariff announcement, set for Wednesday. With fears of sweeping trade measures hanging over the market, the FTSE looked poised for a deeper move lower.
A Bullish Rejection—But Bulls Should Stay Cautious
Just when it looked like the bears might take control, the FTSE 100 daily rolling futures made a late-session comeback. During the final two hours of the UK trading session, buyers stepped in and pushed prices back up. The bullish momentum continued during the latter half of the US trading session, allowing the futures to close back within the mini-range and forming a bullish hammer candle in the process.
This bullish hammer is significant for a few reasons. Firstly, it represents a clear rejection of lower prices, suggesting that the market is not ready to break down just yet. Secondly, the location of the candle adds weight to the signal. Not only does it reinforce the integrity of the mini-range, but it also marks yet another bounce from the VWAP anchored to the December lows—a level that has been a key support point throughout the recent consolidation.
However, it’s essential to keep a level head here. One notable point of caution is that the hammer pattern only formed on the FTSE rolling futures, not on the underlying cash market, which closed at 4:30 UK time. This discrepancy raises a question about how much weight to give the signal.
Additionally, the nature of the consolidation itself hints at a potential problem for the bulls. Tests of the bottom of the mini-range have been far more frequent than attempts at the top, hinting at underlying weakness. While the bullish hammer is an encouraging sign, the pattern of repeated downside tests suggests that sellers remain active.
The FTSE 100’s ability to maintain its ground in the face of potential US tariffs will be the key to watch this week. If the hammer candle holds and the bulls can push prices higher, it could signal a more sustained move back towards the range highs. However, if the downside pressure resumes, it may well prove to be a false dawn.
UK100 Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
FTSE 100 Follows the Price Action Playbook So Far in 2025
The FTSE 100 has been a textbook example of price action trading this year, with breakout moves, clean retests, and trending phases that have given traders plenty to work with. January kicked things off with a breakout from key resistance, quickly followed by a classic retest of the broken level. February saw the bulls take charge, pushing the index higher in a strong trending move.
Then came March, when the rally hit a wall at swing resistance. The failure to break through led to a significant retracement, taking the FTSE back down to the volume-weighted average price (VWAP) anchored to the December lows. This pullback set the stage for the next phase: sideways consolidation, with the index settling into a relatively small ‘mini-range’.
However, this week brought a bit of drama. Yesterday’s price action seemed to have broken the mini-range to the downside as market sentiment soured over Donald Trump’s impending tariff announcement, set for Wednesday. With fears of sweeping trade measures hanging over the market, the FTSE looked poised for a deeper move lower.
A Bullish Rejection—But Bulls Should Stay Cautious
Just when it looked like the bears might take control, the FTSE 100 daily rolling futures made a late-session comeback. During the final two hours of the UK trading session, buyers stepped in and pushed prices back up. The bullish momentum continued during the latter half of the US trading session, allowing the futures to close back within the mini-range and forming a bullish hammer candle in the process.
This bullish hammer is significant for a few reasons. Firstly, it represents a clear rejection of lower prices, suggesting that the market is not ready to break down just yet. Secondly, the location of the candle adds weight to the signal. Not only does it reinforce the integrity of the mini-range, but it also marks yet another bounce from the VWAP anchored to the December lows—a level that has been a key support point throughout the recent consolidation.
However, it’s essential to keep a level head here. One notable point of caution is that the hammer pattern only formed on the FTSE rolling futures, not on the underlying cash market, which closed at 4:30 UK time. This discrepancy raises a question about how much weight to give the signal.
Additionally, the nature of the consolidation itself hints at a potential problem for the bulls. Tests of the bottom of the mini-range have been far more frequent than attempts at the top, hinting at underlying weakness. While the bullish hammer is an encouraging sign, the pattern of repeated downside tests suggests that sellers remain active.
The FTSE 100’s ability to maintain its ground in the face of potential US tariffs will be the key to watch this week. If the hammer candle holds and the bulls can push prices higher, it could signal a more sustained move back towards the range highs. However, if the downside pressure resumes, it may well prove to be a false dawn.
UK100 Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.