Bottom line: FTSE long term structure continues to remain bearish against 7724 resistance. The indice seems to have managed to carve a lower high around 6333 mark over the last week. Bears might be looking poised to resume lower towards 4700 levels soon.

 Fundamental Outlook:

EURUSD has opened the week on a positive note and is trading around 1.1460/65 as we prepare to publish. The exchange rate shall be taking cues from the EU Summit, which failed to reach an agreement last week. The EURO 750 billion stimulus package might reach to a consensus this week.

COVID-19 infections continue to be in the news around US and Asian Countries. Global cases have crossed above 14.5 million and the number of deaths above 600,000 mark. A few states in the US might be going back to lock sown phase as infections continue to rise.

GBPUSD is trading lower today around 1.2545 levels after trading in a range over the last week. The exchange rate will be taking its cues from the Brexit negotiations to be held again today. The EU and UK negotiations has been locked over the “Fisheries Control”.

FTSE had rallied over +2.75% last week and managed to close at 6333 mark. The indice is trading marginally lower around the 6300 mark as of now. The rally over the last week, was in tandem with the SPX500, Dow Jones and DAX as risk assets gained. It remains to be seen how long this continues amidst fears of a second wave of COVID-19 infections.

Technical Analysis:

FTSE might have carved another lower high around 6333 mark over the last week. Immediate resistance is seen around 6500 levels and bears would be poised to resume lower towards 4700 levels until the resistance holds well.

FTSE had earlier dropped from 7724 through 4750 levels as an impulse wave. Ideally, an impulse drop should be followed by a corrective rally. The indice managed to produce a corrective rally towards 6500 levels, which was very close to fibonacci 0.618 resistance of the above drop.

Most traders might initiate fresh short positions around current price action (6300), with protective stops above 6800 and projected targets below 4700 respectively. Only a break above 6900/7000 would change the bearish structure.

Prepared by

Harsh Japee, Technical Analyst.

FTSE Chart

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