Bottom line: FTSE long term structure continues to remain bearish against 7724 resistance. The indice might have carved a meaningful lower top around 6500 mark and bears should be poised to keep prices lower, going forward.
Fundamental Outlook:
EURUSD had reversed from recent highs at 1.1965 on August 19, 2020 post FOMC minutes. The exchange rate had print 1.1754 low before pulling back. It might come under further pressure as the US Dollar strengthens over next few weeks. Watch out for the Jackson Hole Economic Policy Symposium later this week, which may add bearish pressure.
GBPUSD exchange rate had reversed from 1.3267 mark over the last week, closing below 1.3100 handle last week. The exchange rate might face volatile price action as yet another round of Brexit negotiations failed over the last week. It would also take cues from the Jackson Hole Symposium as US Dollar might be setting up to gain.
FTSE is up +1.2% as we prepare to publish and trades close to 6100 mark. The indice remains at a risk of yet another round of selloff as global indices continue to diverge. While SPX500 and NASDAQ climb to new highs, Dow Jones remains stagnant. Investors might remain watchful as COVID-19 infections and geopolitical risks remain.
Technical Analysis:
FTSE continues to remain bearish over the near term as long as prices stay below 6500/6600 mark. The indice might produce a corrective rally towards 6100/6200 levels over the next few trading sessions before reversing lower again. Bears are looking poised to stay in control.
FTSE had earlier dropped from sub 7700 levels through 4750 respectively. The drop was an impulse wave, which was followed by a corrective rally towards 6500 mark. Also note that 6500 is extremely close to the fibonacci 0.618 retracement around 6590 mark.
FTSE might ideally remain below 6500 mark, or could test 6590 in the next few trading sessions. Overall structure would continue to remain bearish either way hence most traders might be willing to sell on rallies, with protective stops above 6600 and projected targets below 4700 mark.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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