Bottom line: FTSE long term outlook continues to remain bearish against 7724 resistance. The counter trend rally that had begun since 4750 earlier had gained momentum last week as bulls managed to print highs around 6450 levels.
Fundamental Outlook:
EURUSD exchange rate has been the biggest beneficiary in the past 2 weeks as it had reached close to 1.1400 levels last week. It would be taking cues on the distribution of the proposed EURO 750 billion recovery fund by the European Union to help recover from the COVID-19 pandemic. The exchange rate might gain further on the agreement of the proposed fund, by all members.
GBPUSD has also managed to rise, pushing through 1.2700 levels. The currency pair might be facing volatility this week, as news come in regarding Brexit talks on the proposed extension of July 01 deadline. The better than expected NFP (+2.5million jobs were added) last week also helped gain as the US Dollar faced a tough week.
Oil prices continued to surge further today, as WTI Crude trades at $39.84, up nearly +2% as we write this article. On the other side Brent is also up over +2.0%, trading close to $42.80. The decision taken by the OPEC+ to continue its production cut of 10 million barrels per day by another month has aided prices further.
Technical Analysis:
FTSE remained in control of bulls over the last week as the counter trend rally extended further towards 6450 levels. The indices is extremely close to carving a major top around 6500 levels, before giving in to bears again as traders might be preparing to initiate fresh short positions around current levels (6450).
Also note that fibonacci 0.618 retracement of previous drop, is seen towards 6590 levels. Probability remains for a push higher towards those levels before finding resistance and reversing sharply lower again. Immediate price resistance is seen around 6888 levels, while support is seen at 5600 respectively.
Structurally, FTSE might be looking to print below 4750 interim support to complete the drop from 7904 highs print in May 2018 earlier. Ideally, prices should stay below 7724 to keep the above bearish structure intact.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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