Bottom line: FTSE long term structure continues to remain bearish against 7724 levels. Moreover, the indice seems to have carved a lower top around 6500 mark. Bears continue to remain in control and should push prices lower towards 4800 levels.
Fundamental Outlook:
EURUSD had managed to pullback from Friday lows of 1.1250 at close. It is trading comfortably above 1.1320 as we prepare to publish the update. Risk sentiment managed to recover despite the rising COVID-19 cases in the US and Asian countries. EURUSD faces a major event risk on July 17, as European Union meets to decide on another EURO 750 billion fiscal stimulus.
GBPUSD managed to gain over the past few trading sessions and peaked 1.2666 today. A broad US Dollar weakness over the past sessions has supported the rise from 1.2250 through 1.2660. Major event risks over the week are Brexit developments, UK GDP figures to be out tomorrow and Unemployment rate the day after.
FTSE had registered 6000 levels last week before pulling back. The indice is trading close to 6200 levels as we prepare to publish today’s update and is soon expected to come under further downside pressure. It is a common phenomenon for risk appetite to rise with rising fundamental concerns, but it might be sending a contrarian signal (risk aversion might be back).
Technical Analysis:
FTSE bears seem to be in control as they managed to push towards 6000 levels last week. The indice has pullback sharply towards 6200 levels but faces resistance here. Expect prices to stay below 6500 mark going forward.
FTSE had earlier dropped from 6500 through 5920 levels respectively. The subsequent rally had managed to reach just over the fibonacci 0.618 retracement of the above rally, seen towards 6286 levels. Ideally, FTSE might hold below 6355 intermediary highs.
Traders might have initiated fresh short positions around 6250/6350, with protective stops above 6800 for now. The weekly chart is pointing towards 4700 and below as projected targets, over the next few months.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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