Bottom line: FTSE long term structure continues to remain bearish against 7724 resistance. Bears have been able to hold prices below the near term resistance at 6200. We need to see a break below 5635 interim support to confirm a meaningful top is in place.
Fundamental Outlook:
FTSE had dropped on Friday to 5872 lows before recovering and had managed to close almost flat at 5998. As US and UK markets remain closed today, price action is expected to remain subdued. Most indices including FTSE would be affected by the rising tensions between the US and China leading to a “Cold-War”.
EURUSD had managed to hit through 1.1000 levels last week. The EURUSD exchange would be taking cues from the German IFO Business Climate figures today, which is expected to print higher at 78.3. Also keep an eye on the France-Germany joint proposal submitted earlier, on the EURO500 billion recovery fund. The above fund was proposed to help hard hit European Countries recover from COVID-19 impact.
Oil prices have managed to rise over the past few sessions as WTI Crude and Brent Crude push through major hurdles at $30.00 and $36.00 respectively. Oil prices are expected to rise as most economies re-open post lock down. We shall also bring a technical update on the expected price action tomorrow.
Technical Analysis:
FTSE has remained within a range between 5600 and 6200 since last several trading sessions. A break on either side is required to decide the next major move by the indice. With the overall structure looking bearish a break below 5600 remains more probable, going forward.
FTSE has stalled around the fibonacci 0.50 retracement of the recent drop between 7724 and 4750 levels, which is seen towards 6200. The high was print on April 30, 2020 and since then the indice has dropped through 5600 and swung back to 6100 levels respectively. A failure to break above 6200 would confirm that the next big move is lower below 4750.
Most traders might be preparing to initiate fresh short positions around 6000/6100 levels with risk above 6800 and projected targets below 4700 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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