Bottom line: FTSE long term structure remains bearish against 7724 resistance. The counter trend rally that had begun since March 23 from 4750 lows, seems to have come to end at 6513 high last week. Bears are expected to remain in control from here on.
Fundamental Outlook:
EURUSD had touched 1.1400 mark last week before reversing as the US Dollar gained against majors. As the COVID-19 fears returns, risk aversion continues over the last few sessions. SPX500 has lost over 7%, while the Dow Jones close to 8% since June 09, 2020. This has aided the Safe Haven US Dollar, as it emerges strong against most majors.
GBPUSD is expected to remain volatile ahead of the meeting between UK’s Prime Minister Boris Johnson and European Commission President Ursula Von der Leyen, over Brexit today. The GBPUSD exchange rate has dropped to 1.2500 mark after last weeks’ high above 1.2800.
FTSE remain no different as DAX, Dow Jones and SPX500 continue their slide from last week. FTSE is down over 8% since June 09 high at 6513, as we write this article. The indice faces further volatility over Brexit negotiations, in addition to risk aversion.
Technical Analysis:
FTSE bears are back with vengeance since 6500 mark last week. The indice has reversed sharply producing an Engulfing Bearish pattern on the Weekly Chart. Bears should remain in control going forward, and push FTSE lower toward 4700 and further.
FTSE has also found resistance just ahead of fibonacci 0.618 resistance seen around 6590 levels. Furthermore, it has also tested the back side of previous support trend line, which is resistance now. The above structure remains religiously bearish, as the indice drop 8% over the last few trading sessions.
Traders might be willing to hold on to short positions initiated around 6500 mark and earlier, with protective stops above 6900. The projected targets are pointing below 4700 mark.
Prepared by
Harsh Japee, Technical Analyst.
FTSE Chart
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