I know that I tend to bang on a bit about the FLD (Future Line of Demarcation), but it is an extraordinarily important line. When I saw this tweet on Wednesday I knew that we were at an important level in the markets:
To understand just how important, here is a chart showing that the 40-week FLD has provided support for the past two and a half years:
The only time that the support has been breached was when price dropped into the 18-month cycle trough of October 2014.
Should we expect the 40-week FLD to continue to provide support? I don’t believe so, in fact I think it is very likely that the 40-week FLD will soon be broken to the downside and will then provide resistance until the next 18-month cycle trough, which I expect to occur early next year.
For those of you familiar with the sequence of price and FLD interactions that informs the FLD Trading Strategy, here is that sequence with the 40-week FLD:
The next interaction is of course an F-category interaction which is a strong cross down below the FLD. This is why I don’t expect the FLD to continue to provide support. After that price cross to the downside the FLD will provide resistance until the next 18-month cycle trough.
Make sure that you follow @SentientTrader on twitter to receive alerts when important levels are touched by price.
If you have a twitter following then spread the news about this important level to watch by clicking here:
Tweet: Here’s why I’m watching the Hurst Cycles 40-week FLD in the S&P 500: http://ctt.ec/z277J+
If you have some extra time then read the original full post here: http://hurstcycles.com/an-important-fld/
