Forex Analysis:FTSE Resistance Is Strong Around 6590 Levels

Bottom line: FTSE long term structure remains bearish until prices stay below 7724 mark. A…

Bottom line: FTSE long term structure remains bearish until prices stay below 7724 mark. A meaningful lower top might be in place at 6513 on June 09, 2020. Bears are looking poised to resume lower towards 4750 levels.

Fundamental Outlook:

EURUSD exchange rate has dropped over 250 pips since recent highs above 1.1400 mark. The risk currency had come under pressure over fears of another wave of COVID-19 infections. It is quite possible that the EURO might have found support around 1.1167 today but a continued shift towards safe haven US Dollar might dampen EURUSD exchange rate further.

FTSE might come under renewed pressure after recovering some lost ground over the last week. The indice rallied almost 2% over the last week, before closing at 6256. The rising tensions over border dispute between India and China may fuel risk aversion further this week.

GBPUSD continued its slide over the last week and dropped over 300 pips from the highs at 1.2688 levels. The US Dollar gained against most currencies, as risk assets slid over the rise in COVID-19 infections in US and other Asian countries. Sterling Pound would also take cues from Brexit developments over the week.

Technical Analysis:

FTSE continues to remain in control of bears as they carve a lower high around 6500/10 levels. The index had reversed sharply towards 5930 mark, before recovering some lost ground over the last week. The indice trades around 6240 levels as we prepare the article and is expected to resume lower towards 4700, going further.

FTSE had found resistance just below fibonacci 0.618 retracement of the earlier drop, which is seen around 6590 mark. Also note the indice faced resistance from the backside of past support trend line around 6500/10 levels.

Traders might have initiated fresh short positions around the 6500 mark, with protective stops just above 6900 and projected targets below 4700 levels, going forward.  Ideally FTSE might stay below the 6500/10 high.

Prepared by

Harsh Japee, Technical Analyst.

 

FTSE Chart

 


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