FTSE100 Update - Finally rolling over?

A couple of days ago I posted a chart showing the FTSE100, it looked like it was ready to go up again. Indicators suggested that we might be in for an early reversal of a minor downtrend that had been in place over the previous couple of weeks. Well, it looks like we got a classic example of indicator headshake, looks like it is going one way and then suddenly reverses, the previous trend still in place.

This is something that needs to be watched out for whenever indicators look like they are reversing from an existing trend. I call it the headshake, because a little like the dummy move that defenders (put in your favorite sport here) are often sold by attackers, you can go one way and then suddenly find your foe has gone in the opposite direction. Yes, you can look like a dummy and markets behave in the same way to.

A typical example of this is the headshake that often happens in the early stages of a Bollinger Band expansion. The Bollinger Band will often, especially after a period of consolidation, open wide, the direction can be up or down. You can see on the chart below how the band opens like a bubble in places, but quite often the initial move that price is making is not the direction that price eventually goes. In other words, you might think the bands are opening to the upside because price seems to be heading that way when in fact it is going to eventually reverse after the initial move and go in the opposite direction. This why it is often important to wait for confirmation. It means you will always miss the early part of a move, but it should keep you clear of the headshake.

As for the FTSE100, the MACD has reversed, moving averages are under pressure and the Parabolic Sar didn't hold. The chart now looks negative, with the Bollinger Band opening towards the downside, unless of course what we are seeing is another headshake. Perhaps the US numbers due out later today will confirm one way or another the direction? If they don't meet market expectations, the charts are telling us we should go lower.

Chart:

FTSE100 - Daily

Update: US job numbers come in worse than expected, adding to today's falls. FTSE 6240 -113 and Dow -140 as of writing.