Ominous signs are gathering for the FTSE 250, says Sejul Gokal, Chief Technical Strategist at GO-TechniKAL Insight.
Gokal notes that several topping candlesticks have appeared at the 76.4% Fibonacci retracement level and mid-Pitchfork line (see Chart 1). Additionally, he points out that internal strength is weakening: the latest peak in the FTSE 250 was unconfirmed by market breadth indicators (e.g. the number of stocks above their 20-day moving average) and stock level participation (as measured by the Advance-Decline line) is falling (see Chart 2).
Gokal says a reversal for the FTSE 250 may also be bearish for Cable. The correlation between GBPUSD and the FTSE 250 is at 0.63, its highest since Brexit day (see Chart 3).