The FTSE 100 - could this be a "Double Top"?

Bad Assed Trader:  I thought I might share with you some thoughts on the FTSE 100 in case you're interested, with a few charts to show you what I mean.

The first chart below is one my coach Emmanuel kindly sent to me showing the way the market's confidence level is shown in the typical cycle of bulls (up) and bears (down). Note that the start of the chart shows the uptrend and the end of the chart is a repetition of this same returning confidence:

The Sentiment Cycle: Typical Market Moods

What I'm particularly looking at on this typical chart is the first couple of peaks (also known as a "double top") showing "returning confidence" and "enthusiasm" after a good climb.  You'll see that there are a couple of lines which, when broken through, provide warning signs that a drop is on the way.

This next chart shows the FTSE 100 index from June 2006 to July 2008:

The last FTSE 100 Double Top

What you can see in the middle of the chart is that double top, the twin peaks where price tries to push up again but fails to make a new high because the sellers are battling the buyers and starting to gain equal strength which then almost inevitably seems to lead to superior strength.  After the double top we get a couple of smaller peaks when buyers try to regain their previous lead but are overwhelmed and then price really starts tanking.

This next chart shows the FTSE 100 over the past year to date:

Where we are now...

Now I don't trade stocks and shares very much and haven't for a while as I've been fixated with the Forex.  But to me this looks like the FTSE 100 is losing steam and heading for a drop.  Compare this chart to the "Sentiment Cycle" at the beginning and it's not difficult to find the matching pattern. If I'm right then they'll be a couple of smaller peaks before it tanks completely but I'm going to start looking for some shorting opportunities soon.  Best to wait for another lower peak before doing this as there's likely to be a retracement up before another move down but worth keeping an eye.

What do you think?  Comments welcome - as always.