Bottom line: FTSE counter trend rally may continue beyond 6200 levels before terminating. The next resistance zone is around 6500, as bulls prepare to push higher again. We can expect a bearish reaction around 6590 mark.
Fundamental Outlook:
FTSE had closed lower by over -1.0% last week, as most Global Equities. The indice had dropped to 5635 lows on Thursday, before closing the week at 5907. Over the coming weeks, FTSE is expected to reel under further pressure as BREXIT fears return. As economies continue to re-open across the US and Europe, concerns remain over COVID-19 cases rising.
EURUSD might reel under further pressure as it continues to consolidate since printing highs at 1.1500 levels around mid-April. The minutes of ECB Monetary Policy meeting later this week shall be closely monitored to see if more stimulus would be required. Furthermore, a re-emergence of US-China trade war tensions could be a negative for EURUSD, as safe haven US Dollar would be back in demand.
GBPUSD faced selling pressure on Friday and may continue as BREXIT fears return. As another round of negotiations between UK and the EU concluded on Friday, little or progress seem to have been made. The currency also faces uncertainty over rising tensions between the US and China amidst the ongoing COVID-19 crisis. The GBPUSD trades just above the 1.2100 mark as we write this article.
Technical Analysis:
FTSE outlook remains bearish in the long run but the counter trend rally that had begun since 4750 levels might not be complete yet. High probability remains for another lower high towards 6500/6600, before resuming lower again.
FTSE had dropped to interim support around 5635 levels last week before reversing. The indice is seen to be trading close to 5900 mark for now and a break above 6000 would be encouraging for bulls. Most aggressive traders might be preparing for another round of rally towards 6500/6600 zone before reversing.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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