Bottom line: FTSE long term trend continues to remain bearish against 7724. Meanwhile bears have managed to carve a lower top around 6500 mark. The indice might face short term resistance around 6100/50 levels, going forward.
Fundamental Outlook:
EURUSD had raised through 1.1909 levels last week before turning lower amidst profit taking. Friday saw prices peaking at 1.1909 first and closing lower at 1.1770, swinging close to 150 pips. The exchange rate might come under further pressure as US Dollar might gain over the next few weeks.
FTSE had closed lower around 5900 on Friday, dropping by over -2.16%. The indice might be set to recover as markets open today and could reach 6100/50 mark. Global Markets might face another round of selloff as risk sentiment remains fragile over COVID-19 pandemic and US-China tensions.
GBPUSD also managed to push higher on Friday hitting 1.3170, before reversing sharply. The exchange rate swung over 130 pips before closing around 1.3080. Bank of England would be coming out with its monetary policy this week and GBPUSD exchange rate might be taking its cues from there.
COVID-19 infections continue to rise across countries as fear of the second wave grips further. Infections rise in Spain and Australia, as the city of Melbourne is being locked down again. Adding to this is the rising tensions between US and China as TikTok might be banned in the US. Risk aversion might return and the safe haven US Dollar might be set to gain, going further.
Technical Analysis:
FTSE remains in complete control of bears, as the indice prints below 5900 mark over the last week. Intraday/short-term rallies remain possible from here but prices should face resistance around 6100/50 levels. Bears might be targeting below 4700 mark over the next several weeks.
FTSE has been carving lower lows and lower highs since 7900 levels in May 2018. The indices should face immediate resistance at 6500, followed by 7724 while interim support is around 5630 mark respectively. Bears would remain in control until 6500 resistance holds.
Traders might hold short positions initiated around 6300 levels and also looking to add further around 6100/50 levels. The protective stops might be shifted to 6500 from 7724 now, and projected targets remain around 4700 levels, going further.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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