Bottom line: FTSE long term structure continues to be bearish against 7724 resistance. The indice had carved a lower high at 6500 levels on June 08, 2020. Bears have managed to hold below that mark as they prepare to break below 6000 mark.
Fundamental Outlook:
EURUSD raised through fresh highs around 1.1725 this morning ahead of the FOMC and Q2 GDP to be out this week. The US Dollar has faced heavy sell off against major currencies including the Japanese Yen. The EURUSD exchange rate might get further boost if the Euro Zone Q2 GDP prints better.
FTSE had dropped over -3.05 on Friday, closing around 6117 levels. The indice followed Global Equity Markets lower as risk sentiment turned negative. It might just be the beginning of a much larger selloff with COVID-19 infections still on the rise and US-China relation under stress.
GBPUSD exchange rate also increased marginally and touched 1.2850 today. The currency might come under pressure as it would be taking cues from a NO Brexit deal for now. Fisheries control remain a major hurdle, as negotiators called off talks at least for now.
Technical Analysis:
FTSE has reversed sharply from 6300/20 highs as expected, holding below the critical 6500 mark (June 08, high). Bears seem to be back in control as they are inclined to push below 6000 levels in the short term. The drop is expected to accelerate thereafter.
FTSE had earlier dropped from around 7724 through 4750 levels between February-Mach 2020. The entire drop was retraced close to the fibonacci 0.618 levels around 6500 mark. The indice is expected to hold below that mark and proceed lower as bears remain in control.
Most traders might want to remain short with protective stops above 6800 levels (safer side) for now. The projected targets are below 4750 over the next few months and only a consistent break above 6500 would change the structure.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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