Bottom line: FTSE bearish structure is expected to remain intact until prices stay below 5800 levels going further. A break below 5330 would confirm the above outlook and FTSE might be heading below 4700.
Fundamental Outlook:
Bank of England has resumed its bond buying program along with the ECB. Most Central Banks along with the FED has pumped in liquidity into the banking system to support companies. An agreed consensus between the Government and Banks would further boost sentiment and help revive FTSE higher.
Nearly 10 million U.S citizens applied for benefits over jobs lost in the past few weeks. This number is exceedingly higher since 2009. Adding further to this, COVID-19 cases continue to rise with U.S topping the list of total affected cases around 336,830.
The Euro awaits a decision on Corona bond, and this might affect the price action. If an agreement is reached, it could boost the EURO while a rejection of the deal could further put pressure on it.
Oil’s surge of over 30% last week could be seen as an end to price war between Russia-Saudi Arabia. The OPEC meet ahead, might add further to the price action, and push through higher levels.
Technical Analysis:
FTSE might have completed its counter trend rally around 5800 levels as discussed and expected. The indice seems to be drifting sideways since then, and could be forming a triangle structure. If prices break below the 5330 levels, it would confirm a bearish breakout and FTSE might be heading below the 4750 levels.
Also note that FTSE had rallied up to fibonacci 50% retracement of the previous drop between 6888 and 4762 around 5800 levels respectively. Most traders might have initiated fresh short positions from those levels, with a protective stop above 6200 (price resistance) and projected targets below 4750 respectively.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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