Bottom line: FTSE long term bearish structure continues to hold as prices remain well below 7724 resistance. Bears might be inclined to resume lower, as the indices tests fibonacci 0.50% retracement over 6220 mark, last week.
Fundamental Outlook:
FTSE managed to gain over +1.5% last week, closing around the 6100 mark. The indice would be taking cues from its peers Dow Jones and SPX500; along with the proceedings over Brexit. Risk sentiments refused to budge over the rising tensions between US and China over the past couple weeks. It would be interesting to see how long the rally continues as the week proceeds.
EURUSD continues its march higher and gained over the last month, managing to test 1.1150 mark last week. This despite rising tensions between US and China, the US Dollar Index declined over the past few trading sessions as risk sentiment continued its gains. It remains to be seen how EURUSD would react to host of events including the ECB rate decision and US Non-Farm Payrolls this week.
GBPUSD has covered a lot ground from its May lows at 1.2080 mark. The British Pound gained against the US Dollar along with other majors and is now trading comfortably above the 1.2420 mark. We can expect some volatility to chip in as Brexit talks resume. It remains to be seen if the June deadline for transition is extended or not.
Technical Analysis:
FTSE continued to rally over the last week before hitting resistance around 6220 levels last week. Please note that the fibonacci 50% retracement of the drop between 7724 through 4750. Has been tested. A bearish reaction here, could resume lower below 4750 mark in the coming weeks.
FTSE might test 6500, which is the fibonacci 0.618 retracement of the above drop if bulls manage to break consistently above 6250 mark. Having said that, high probability remains for the down trend to resume towards fresh lows. A break below 5872 would confirm that a top is in place and that bears are back in control.
Traders might be preparing to initiate fresh short positions around 6100/6200 zone, with a protective stop above 7724, with [projected targets below 4750 respectively.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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