Bottom line: FTSE long term structure continues to remain bearish against 7724 levels. A lower top is also in place around 6500 levels and the indice should ideally stay below that, going further. Bears remain poised to push below 4750 mark.

 Fundamental Outlook:

EURUSD had rallied back on Friday, to close above 1.1900 mark after a volatile trading session the day before. The FOMC might continue its dovish stance and more accommodative monetary policy going forward. The above announcement might have led to the US Dollar slide over the last week.

GBPUSD has managed to print 1.3369 high today, as the safe haven US Dollar continued to slide during the Asia-Pacific session. It would be interesting to see if the exchange rate pushes further towards 1.3400/1.3500 psychological mark.

COVID-19 infections continue to rise in several European countries, increasing the risk of a second wave. The worst affected nations Italy, Spain and France might be facing more restrictions and lockdowns if infection rate increases further.

Technical Analysis:

FTSE remains bearish as long as it holds below 6500 resistance in the near term. Bears continue to remain in control since the 7724 mark, and are looking further poised to push through 4750 in the next several weeks. Looking lower from here.

FTSE had carved a major bearish boundary between 7696 and 4750 levels respectively. Also note that a counter trend rally also looks complete around 6500 mark. Ideally, the next major direction might be lower towards 4750 levels at least.

Furthermore, FTSE had rallied through fibonacci 0.618 resistance seen around 6500/90 levels. High probability remains that prices should hold lower from here. A push below 5950 might further encourage bears to accelerate lower.

Most traders might be preparing to initiate/add short positions on rallies through 6100/6200 mark. A protective stop might be places ideally above 6500 levels with potential targets pointing below 4750 respectively. Counter trend rallies might offer opportunities to initiate short positions.

Prepared by

Harsh Japee, Technical Analyst.

FTSE Chart

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