Bottom line:  FTSE long term bearish structure remain intact until prices stay below the 7724 mark. The counter trend rally that had begun since 4750 levels, might have completed around 5928 and bears might be preparing to take control back.

Fundamental Outlook:

Global equity markets including FTSE, would be taking cues from COVID-19 drugs being tested and most countries planning to open up. It could lead to a positive effect on equity markets this week as most governments plan to end lock down in a phased manner starting first week of May 2020.

Italy, which was the worst hit by the COVID-19 pandemic, finally prepares to end shutdown in a phased manner starting May 04, 2020. The COVID-19 curve continues to flatten globally with lower cases and deaths reported.

Oil prices continue to slide lower as we write this article. Brent Crude trades close to 20.00 mark while WTI Crude is trading lower around $15 per barrel as global demand continues to plunge amidst the COVID-19 pandemic.

Technical Analysis:

FTSE might have carved a meaningful lower high around 5928 on April 14, 2020. The indice has drifted in a close trading range since then, and could be preparing to resume lower again.

FTSE counter trend rally has reached fibonacci 0.50 retracement of the previous drop between 6888 and 4750 respectively. It is quite possible for a test of 6078 levels, which is fibonacci 0.618 retracement before reversing lower again.

Structurally, FTSE could be heading below 4750 levels to complete the drop from 7724 levels. Immediate resistance is seen at 6888, the March 04 high, while intermediary support is seen towards 5516 respectively. A drop below 5500 would confirm that bears are back in control.

Most traders might be willing to initiate short positions close to 5900 levels, with protective stops above 6900 at least and projected targets below 4750 respectively.

Prepared by

Harsh Japee, Technical Analyst.

FTSE Chart

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