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Daily Pivots: (S1) 0.8877; (P) 0.8954; (R1) 0.8995; More...

The sharp decline from 0.9032 argues that rebound from 0.8745 could have completed. Intraday bias in EUR/GBP is turned back to the downside for 0.8745. Break there will resuming the whole fall from 0.9305 towards 0.8303/12 key support level. On the upside, above 0.9032 will resume the rebound from 0.8745 through 61.8% retracement of 0.9305 to 0.8745 at 0.9091 for retesting 0.9305.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.9303 low. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Much volatility was seen in Sterling in the past 24 hours on news regarding Brexit. British Pound suffered steep selling yesterday on news that the fifth round of Brexit negotiations ended with "deadlocks" on the issue of the divorce bill. Nonetheless, Sterling was quickly popped up by reports that UK could get a 2-year Brexit extension. A German newspaper Handelsblatt quoted unnamed source that EU could give that extension to UK under the conditions that the latter will fullfil all obligations as a member country. However, UK will be required to give up its voting rights. If it's true, more time will be allowed for business and citizens of both UK and EU to adjust to the changes.

Meanwhile, BBC reported that a draft paper was submitted to the 27 EU states by European Council President Donald Tusk. The paper indicates that free trade talks could start as soon as December. It's near impossible that EU officials will give a "go" signal for trade discussion at the October 19/20 summit due to lack of "sufficient progress" in the negotiations. But opening up the case for start trade agreements in December could give UK the "carrots" for being more decisive on closing issues like the divorce bill.

ECB to cut monthly asset purchase size by half

It's reported the ECB policy makers are considering to cut the monthly asset purchase target by at least half starting next year. That is, the current EUR 60b per month pace could be lowered to EUR 30b per month. Some officials see that as a feasible option. But there are differences on the duration of the extension of the program. ECB spokesman declined to comment on the report.

ECB President Mario Draghi reiterated that interest rate will remain at the current record low "well past" the end of the asset purchase program. He emphasized that the "'well past' is very, very important in anchoring rate expectations." ECB is widely expected to "recalibrate" its asset purchase program this month on October 26.

Trump have more Fed chair interviews to come

In US, White House Chief of Staff John Kelly said that President Donald Trump will have more interviews with the candidates for the job of Fed chair. Kelly said that "all of the people who've been in to interview have been first-round draft choices". And, "we still have more to come." The current short list include Fed Chair Janet Yellen, former Fed Governor Kevin Warsh, current Fed Governor Jerome Powell, Trump's economic advisor Gary Cohn and Stanford University economist John Taylor. Separately, Treasury Secretary Steven Mnuchin said that Trump has no specific deadline to make the decision but it should happen within the month.

Fed Bullard urged not to lose credibility

St. Louis Fed President James Bullard warned that Fed could lose its credibility if it insists on normalizing interest rate without clear evidence of rising inflation. He noted that "if you are going to have an inflation target you should defend it. If you say you are going to hit the inflation target then you should try to hit it and maintain credibility." He pointed to the sluggishness in this year's inflation and said "we more or less lost all the progress that we made the last two years". And, that can send a signal to markets that the inflation target is not that important."

Fed Governor Jerome Powell said that "Fed policy normalization is occurring not in isolation, but in the context of a solid U.S. economic recovery, which should benefit all economies around the world." And, "the most likely outcome is that the challenges posed to (emerging markets) by the normalization of global financial conditions will be manageable." 

China trade surplus narrowed

Released from China, trade surplus surprisingly narrowed to a 6-month low of US$28.5B in September, from US$42B a month ago. The market had anticipated a milder drop to US$39.5B. Growth in exports improved to 8.1% y/y from 5.5% in August, while growth imports accelerated significantly to +18.7% from July's +13.3%.

Notwithstanding a disappointing headline, the report continued to paint a healthy picture on China's economic outlook. A stronger-than-expected imports growth underpinned domestic economic strength. Exports growth, despite missing consensus, still picked up from the same period last year.

More importantly, a narrowing trade surplus could tame the US' complaint of China's currency manipulation. This should help the government maintain a stable and modestly strong renminbi as CCP's 19th national congress approaches. More in Strong Domestic Demand Despite Weak Surplus Headline.

Elsewhere

New Zealand Business NZ manufacturing index dropped to 57.5 in September. Japan M2 rose 4.1% yoy in September. German CPI was finalized at 0.1% mom, 1.8% yoy in September. US CPI and retail sales will be the main feature later in the day.

EUR/GBP Daily Outlook

Daily Pivots: (S1) 0.8877; (P) 0.8954; (R1) 0.8995; More...

The sharp decline from 0.9032 argues that rebound from 0.8745 could have completed. Intraday bias in EUR/GBP is turned back to the downside for 0.8745. Break there will resuming the whole fall from 0.9305 towards 0.8303/12 key support level. On the upside, above 0.9032 will resume the rebound from 0.8745 through 61.8% retracement of 0.9305 to 0.8745 at 0.9091 for retesting 0.9305.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.9303 low. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Economic Indicators Update

It has certainly been another eventful trading week for financial markets, as investors tussled with rocky Brexit negotiations, Catalonian developments and geopolitical tensions across the globe.

Global stocks have displayed resilience againstpolitical and geopolitical risk this week, with Asian shares mostly higher during early trading on Friday - thanks to optimism over the global economy. European equities ended mixed on Thursday, amid ongoing political uncertainty in Catalonia and trading may follow a similar pattern today, if market players remain on the sideline. Wall Street retreated from record highs yesterday, and it will be interesting to see how U.S. stocks react to the pending inflation report from the States.

Bitcoin sprints to all-time high

Bitcoin was the talk of the town across financial markets on Thursday, after the cryptocurrency smashed through the $5000 barrier, hitting an all-time high of $5,386.2. It is remarkable how, despite the slew of negative news fired at Bitcoin, it has remained extremely resilient. With prices already surging over 450% this year to above $5300, further gains could be on the cards,as extremely bullish momentum encourages investors to speculate on even grander gains.

Sterling sensitive to Brexit negotiations

The aggressive price action Sterling displayed on Thursday continues to highlight how increasingly sensitive the currency has become to Brexit negotiations.

Earlier on Thursday, the British Pound was under extreme selling pressure after Michel Barniersaid that talks around Britain’s exit from the European Union, were at a “disturbing deadlock”. Sterling later clawed back earlier losses, after a report in Germany’s Handelsblatt newspaper said that the United Kingdom could be offered a two-year transitional Brexit deal.

This could be a wild final trading quarter for the British Pound, especially when considering how the currency has become increasingly sensitive to both monetary policy speculation and Brexit negotiations. Taking a look at the technical picture, the GBPUSD still remains pressured on the daily charts below 1.3300. A failure for bulls to break above this level, may encourage a decline back towards 1.3150. In an alternative scenario, a classic breakout above 1.3300 should trigger a further incline towards 1.3380.

Dollar lower ahead of CPI

The Dollar edged lower against a basket of major currencies during early trading on Friday, as investors awaited U.S. inflation data, which could mould expectations on when the Fed plans to raise rates again this year.

This has been a painful trading week for the Dollar, as fading hopes on Trump’s tax plan and mixed Federal Reserve meeting minutes, weighed heavily on the currency. While September’s meeting minutes revealed that a December interest rate hike was on the table, policymakers remained divided over the inflation outlook in the U.S.. Although expectations remain elevated over the Federal Reserve raising U.S. interest rates in December- with markets pricing in an 88% probability, the outlook for rate hikes in 2018 is open to debate.

Investors should also pay close attention to Trump’s choice of Fed chair. If Trump selects a dovish Chair to replace Janet Yellen, this could weigh on the prospects of higher U.S. interest rates in 2018, consequently pressuring the dollar.

From a technical standpoint, the Dollar Index is under pressure on the daily charts. Sustained weakness below 93.00 may open a path towards 92.50.

Currency spotlight – EURUSD

The Euro enjoyed a relief rally this week, as tensions eased in Spain after Catalonia suspended its declaration of independence.

While the EURUSD could edge higher in the short term amid the optimism, gains are likely to be limited if investor jitters make a comeback. With Spanish Prime Minister Mariano Rajoy giving Catalonia five days to declare independence - or back down, the clock is ticking. If Carles Puigdemont declares independence, then Madrid may try to seize control of Catalonia by invoking Article 155 of the Spanish Constitution. The uncertainty created by such developments is likely to punish the Euro and heighten concerns over political instability in Europe.

Focusing on the technical outlook, EURUSD has found itself in a wide range on the weekly timeframe, with support at 1.1680 and resistance found at 1.2000. Technical traders will be closely observing how prices react to the 1.1850 level - a pivotal point on the daily timeframe. A breakout above this level may open a path towards1.1920. In an alternative scenario, sustained weakness below 1.1850 could encourage a decline towards 1.1730.

In early Friday trading, the markets are relatively static as they wait, in anticipation, for today's US inflation data that will potentially give confirmation that the FOMC will hike interest rates in December. According to the latest CME Fed Watch tool, there is an 88% probability of a rate hike in December. Thursday's release of US PPI for September showed producers experiencing a 0.4% increase, in line with expectations, after a 0.2% increase in August. With producers experiencing inflation, the markets will now be looking at today's CPI to see if such inflationary pressures are reaching consumers. It is, however, important to note that these particular data releases are likely to be 'skewed', as the US economy is still being impacted by Hurricanes Harvey and Irma.

The US Labour market is showing more resilience as Thursday's Initial Jobless Claims from the US Labour Department showed a better than expected decline of 15,000 to 243,000 for the week ended October 7th – better than many had forecast. With fewer Americans seeking unemployment benefits (i.e. more in full-time employment), many expect this fact to also put more inflationary pressure on the US economy and provide more confirmation to the Fed that they can raise rates.

EURUSD is holding steady in early trading, currently at 1.1850.

USDJPY is 0.2% lower overnight, currently trading around 112.05.

GBPUSD is little changed overnight. Currently, GBPUSD is trading around 1.3275.

Gold is trading 0.25% higher, currently trading at $1,296.

WTI benefitted from the recent EIA data gaining 0.25% overnight. Currently, WTI is trading around $51.20.

Major data releases for today:

At 15:30 BST, the US Census Bureau will release Retail Sales (MoM) for September. Consensus is calling for a strong release of 1.7% compared to the previous release of -0.2%. If the release is >1.7% the markets will expect to see USD buying, as it will add to confirmation for a rate hike by the Fed before Year End as consumers are spending more and therefore adding to upward inflationary pressure.

At 15:30 BST, the US Bureau of Labor Statistics will release Consumer Price Index (YoY) and (MoM) for September, along with CPI ex Food & Energy, Core and n.s.a. Annualized CPI is expected to come in at 2.3%, a healthy improvement from the previous release of 1.9%. Month-on-Month CPI is also expected to come in higher at 0.6% from the previous release of 0.4%. As an inflationary indicator, releases above the expected will see USD appreciate

EUR/USD

Current level - 1.1845

The support at 1.1830 is intact and the overall outlook remains bullish, for a rise towards 1.1940 zone. An eventual slide below 1.1830 will challenge 1.1790 support, which should provide a reliable base for the expected upswing.

USD/JPY

Current level - 112.10

The bias is bearish, for a slide towards 111.50. Crucial on the upside is 112.80.

GBP/USD

Current level - 1.3274

The violation of 1.3220 resistance signals a further appreciation towards 1.3340 area. Crucial on the downside is 1.3170.

Currency pair GBP/USD

The GBP/USD broke the support trend line (dotted blue) but failed to break below the previous bottom and is now challenging again the resistance zone (red) and Fibonacci levels of wave 4 (orange). A bullish break would change the wave patterns and could indicate a bullish 123 (brown) or larger ABC. The strong up and down could have been caused by the Brexit news which first

The GBP/USD bounced strongly at the 61.8% Fibonacci support level creating a "V valley" reversal after strong bearish momentum occurred with a 150 pip decline. The extended bullish correction could be a WXY (brown) within wave 4 (orange). A bullish break would make a wave 4 pattern less likely.

Currency pair EUR/USD

The EUR/USD is challenging a resistance trend line (orange). A bullish breakout could see price challenge the larger resistance (red) but it remains unclear whether price is in a wave 5 or in an expanded wave 4 at the moment.

The EUR/USD has retraced back to the 38.2% Fibonacci level of wave 4 (pink). Price could be ready for a bullish continuation as long as price stays above the 61.8% Fibonacci level.

Currency pair USD/JPY

The USD/JPY could be building a larger WXY (pink) correction within wave 2 or B (purple).

The USD/JPY could be completing a potential ABC (purple) correction within wave Y (pink).

Market movers today

Key market movers today will be CPI inflation and retail sales in the US. We estimate CPI core increased 0.2% m/m (1.8% y/y against 1.7% y/y in August ), which is a bit more than the trend seen over the past half year. We expect headline CPI to come out at 0.6% m/m (2.3% y/y against 1.9% y/y in August ) driven by a sharp rise in gasoline prices related to the hurricanes Harvey and Irma. If our estimates turn out right , then both CPI and CPI core will be close to/above the 2% target , but note that the Fed targets PCE inflation (still significantly below target ) and hence it is still struggling with low inflation.

With respect to the US retail sales cont rol group, we expect to see some reversal of the August decline of 0.2% m/m and look for a rise of 0.4% m/m. We also have US consumer sent iment from University of Michigan (preliminary) and a couple of Fed speeches by Evans (voter, dovish) and Kaplan (voter, dovish).

Note that a speech on monetary policy by Fed chair candidate Jerome H. Powell scheduled for today has been cancelled.

In Europe focus continues to be on the situation in Catalonia and Brexit negotiations.

Selected market news

Like the rest of the week, markets have been calm overnight. US stocks closed lower but Asian equities are up this morning and US S&P 500 futures are trading flat . EUR/USD is slightly higher, perhaps on the ongoing discussions on US tax reform, which show that tax reform is easier said than done, in line with what we had argued for. Brent crude oil is up to USD56.55/barrel after report showing US stockpiles fell.

Yesterday, US Treasury secretary Mnuchin said that he expects Trump to nominate a new Fed chair "next m onth". Kevin Warsh (previous Fed governor 2007-2011) and current Fed governor Jerome Powell are the two top candidate but John B. Taylor (professor at Stanford University) is also in play. Chief of St aff John Kelly says an announcement is " some t ime away".

Yesterday, EUR/GBP broke the 0.90 level yesterday (the highest in a month) after the joint Brexit press conference by EU chief negotiator Michel Barnier and UK Brexit Secretary David Davis, where Barnier said there have not been "sufficient progress" in the negotiations to move from phase 1 (divorce bill, Irish border and cit izens' right s) t o phase 2 (future relat ionship) when the EU leaders meet next month. Barnier is still optimistic about reaching an agreement before the EU summit in December but further negotiation rounds are needed. Still we were caught by surprise by the negative market reaction, as we think the comments were in line with what most had expected. The reaction was possibly fuelled by a somewhat misleading Bloomberg headline suggesting that Barnier said that Brexit talks had reached a " deadlock", which, however, was only about the divorce bill. As we have mentioned previously, we think the biggest obstacle for the negotiations is the divorce bill, as it is difficult for the UK to agree on a divorce bill before knowing the future relationship. Yesterday afternoon EUR/GBP fell back again and is trading at 0.892 currently after a story that EU might tell Barnier to begin preparing for discussions on a transitional deal (behind closed doors).

Sunrise Market Commentary

• Rates: Geopolitics vs US eco data
  Today's eco calendar heats up in the US. We expect strong eco data with upside risks to core inflation. Such outcome is negative for US Treasuries. Any downward reaction in core bonds will probably be short-lived with geopolitical uncertainty high on the agenda. Ahead of the weekend, safety flows might dominate.
• Currencies: Will US data be strong enough to support further USD gains
  The dollar bottomed yesterday. A series of key US data including the CPI and the retail sales have the potential to move the dollar today. The data are expected strong, but looking at this week's mediocre USD performance, success isn't guaranteed.

The Sunrise Headlines

• US stocks slipped from record highs to finish the day in the red. JPMorgan and Citigroup presented mixed third-quarter results while AT&T dragged telecoms lower. Asian equities trade positive this morning with Japan outperforming.
• Central banks risk destabilizing the financial system if they extend bond-buying programmes for too long, ECB Coeuré said. Chief economist Praet recently said that the programme might be extended for nine months or more, underscoring the difference of opinion on the ECB board.
• EU leaders will refuse to open talks with the UK on post-Brexit transition at next week's summit because of the lack of progress on a divorce settlement, dealing a blow to British efforts to break a deadlock in negotiations.
• China's imports (18.7% Y/Y) and exports (8.1% Y/Y) grew at a faster pace in September than in August, suggesting that the country is still expanding at a healthy clip despite widespread forecasts of an eventual slowdown.
• President Trump signed an order to make it easier for Americans to buy bare-bones health insurance plans, using his presidential powers to undermine Obamacare after fellow Republicans in Congress failed to repeal the 2010 law.
• Ireland's recovery from the crash that led to an international bailout has reached a symbolic turning point as the country's “bad bank” pays off the final slice of the €30.2bn senior debt it borrowed to clean up the financial system.
• Today's eco calendar heats up in the US with September CPI, retail sales and October Michigan consumer confidence. Fed Rosengren, Evans & Kaplan and ECB Mersch & Constancio are scheduled to speak

Currencies: Will US Data Be Strong Enough To Support Further USD Gains

Key US data to decide on next USD move?

Yesterday, the USD bottomed after a decline earlier this week. Especially EUR/USD declined modestly off yesterday morning's correction top. USD/JPY continued to trade with cautiously negative bias. A further decline in US jobless claims and rise in the core US PPI were slightly supportive for the dollar. EUR/USD finished the session at 1.1830 (from 1.1859). USD/JPY closed the session at 112.28 (from 112.50).

Overnight, Asian markets extend gains despite a minor decline in the US yesterday evening. Chinese export and imports rose sharply, suggesting good economic activity. There is again a ‘disconnect' between rising Japanese equities and USD/JPY. The latter still struggles not to fall below the 112 barrier even as the Nikkei surpassed the 21 K barrier. The dollar is also losing a few ticks against euro. EUR/USD trades in the 1.1845.

Today, US inflation, retail sales and Michigan consumer confidence have potential to move the dollar. CPI inflation likely increased sharply, especially due to higher gasoline prices. We keep a close eye on core inflation. It showed signs of bottoming out in August. The core might surprise on the upside (expected 1.8% Y/Y up from 1.7% Y/Y previously). Retail sales are expected very strong (1.7% M/M). Car sales rebounded and sales at gasoline station should have done well (price effect). Core sales should also have rebounded. Given the high expectations, we side with the consensus. A strong set of US eco data, if confirmed, would further galvanise expectations that the Fed will increase rates in December and maybe stimulate markets to discount more rate hikes in 2018 than hitherto. Aside from the data there is still plenty of political event risk that might interfere on markets (Catalonia, elections in Austria, the impact from Trump cutting off subsides for Obamacare and a declaration of president Trump on Iran). The impact of each of these factors will be different. An event turning into a risk-off sentiment might be negative for the dollar (e.g. Iran).

After a cautious comeback, the dollar lost again ground this week. USD investors want concrete news on the tax reform, on the economy and on the Fed's rate intentions. The absence of progress on these issues caused some “by-default” USD selling. Today's retail sales and CPI might bring some positive economic news. However, the consensus already expects strong data

So, we look out whether they are good enough to put a more sold floor under the dollar. After this week's disappointing USD performance, there is no guarantee for success. Especially the USD/JPY performance is a bit worrisome. We first want a sign that the dollar secures solid interest rate support before considering to add USD longs.

From a technical point of view, EUR/USD dropped below the 1.1823/ 1.2070 consolidation pattern last week, but no real test of the 1.1662 support occurred. On Wednesday, the pair even returned above the 1.1823 previous range bottom, which was disappointing for EUR/USD bears. If EUR/USD doesn't resume its gradually downtrend after today's US data, we have to leave our short-term sell-on upticks bias. In that scenario, the 1.20/1.2092 levels might come again on the radar. The USD/JPY momentum was constructive of late, but for an important part due to yen weakness. USD/JPY regained 110.67/95 (previous resistance), a short-term positive. The 114.49 correction top is the next important resistance. The rally clearly lost momentum last week. So a break beyond 114.49 is difficult.

EUR/USD: Will US data be strong enough to support the dollar?

EUR/GBP

Sterling withstands mini Brexit-storm

Yesterday, Brexit again dominated sterling trading. Early in the afternoon, the UK currency was sold off as EU Brexit negotiator Barnier said that the state of the negotiations doesn't allow him to recommend the start of talks on post-Brexit UK/EU trade relationships at next week's EU summit. Barnier especially spoke very harsh on the financial separation bill as he said the negotiations on this topic were in a deadlock. The comments pushed sterling off a cliff. EUR/GBP jumped north of the psychological barrier of 0.90. However, later in the session sterling recouped the losses on press headlines the EU would reveal preparations for a transition period next week. EUR/GBP finished the session at 0.8919. Cable finished the session also with a small gain at 1.3262.

Today, there are no important UK eco data. So, markets might further adapt positions in the wake of yesterday's Brexit debate. The hope for a modestly constructive attitude at next week's EY U summit might give sterling some temporary downside protection.

EUR/GBP staged a strong uptrend since April to set a top at 0.9307 late August. UK price data and hawkish BoE comments reinforced a sterling rebound. Medium term, we maintain a EUR/GBP buy-on-dips approach as we expect the mix of euro strength and sterling softness to persist. The prospect of (limited) withdrawal of BoE stimulus triggered a good sterling countermove, but this rebound has run its course. EUR/GBP supports at 0.8743 and 0.8652 are difficult to break. We look to buy EUR/GBP on dips. Last week's rebound above the 0.89 area improved the ST technical picture of EUR/GBP. EUR/GBP 0.9026 is the 50% retracement of the recent countermove

EUR/GBP rebound slows, but holds north of 0.89

Download entire Sunrise Market Commentary

China's trade surplus surprisingly narrowed to a 6-month low of US$28.5B in September, from US$42B a month ago. The market had anticipated a milder drop to US$39.5B. Growth in exports improved to 8.1% y/y from 5.5% in August, while growth imports accelerated significantly to +18.7% from July's +13.3%. Notwithstanding a disappointing headline, the report continued to paint a healthy picture on China's economic outlook. A stronger-than-expected imports growth underpinned domestic economic strength. Exports growth, despite missing consensus, still picked up from the same period last year. More importantly, a narrowing trade surplus could tame the US' complaint of China's currency manipulation. This should help the government maintain a stable and modestly strong renminbi as CCP's 19th national congress approaches.

We notice that Aussie moved a tad higher after the trade report. This was driven by the record iron ore imports. China's iron ore imports jumped +11% y/y in September to a fresh record of 103M. The previous record of 96.5M tones was made in March. For the first nine months of the year, iron ore imports increased +7.1% to 81M tonnes. The outlook of iron ores demand in China, the biggest consumer of the raw material, is more uncertain as the government curtails steel production capacity in winter to control pollution. Producers pushed forward their production before closure, lifting iron ore demand and hence prices. Demand in coming months can slump due to curtailment. It might, however, increase as producers re-stock.

FX Reserve

On a separate note, China's FX reserve rose, for a 8th consecutive month, to a 11-month high of US$3.109 trillion in September from 3.07 trillion a month ago. Higher demand for renminbi and eased capital outflow, as a result of robust first half economic growth and the government's stringent capital controls, have led to rising FX reserve over the past months. Relieving form the recent strength in renminbi, the government has also found no urgency to dump foreign currencies. The government prefers to see a stable and stronger domestic currency ahead of the party congress begins next week. It would likely continue to maintain a modestly positive, but controllable, renminbi ahead.

FTSE Short term Elliott Wave analysis suggests decline to 7196.58 ended Primary wave ((4)) on 9/15 low. Up from there, rally in Primary wave ((5)) is unfolding as a zigzag Elliott Wave structure. Intermediate wave (A) of this zigzag structure remains in progress as 5 waves impulse where Minor wave 1 ended at 7327.50 and Minor wave 2 ended at 7289.75. Rally to 7527.59 ended Minor wave 3 and decline to 7493.04 ended Minor wave 4. Cycle from 9/15 low is mature and can end any moment. However, while near term pullbacks stay above 7493.04, Index could see more upside before ending the cycle from 9/15

Chasing the rally higher at this stage is risky as Intermediate wave (A) could end soon. Once Intermediate wave (A) is complete, Index should pullback in Intermediate wave (B) in 3, 7, or 11 swing to correct cycle from 9/15 low (7196.58) before the rally resumes. We do not like selling the Index. We favor extension higher once Intermediate wave (B) pullback has ended later as far as pivot at 9/15 low stays intact.

FTSE 1 Hour Elliott Wave Chart

Zigzag is a common Elliott Wave corrective structure. It has internal subdivision of 3 waves and labelled as ABC. The first leg wave A is subdivided in 5 waves and can either be an impulse or a diagonal. The second leg wave B can unfold in any corrective structure. Finally, the third leg wave C is also subdivided into 5 waves and can also be either an impulse or a diagonal. Zigzag therefore is a 5-3-5 Elliott Wave structure. Wave C typically ends at 100% – 123.6% of wave A.