FTSE 100: Short Term Opportunities Abound

23 January, 2014

FTSE 100: Short Term Opportunities Abound

The FTSE 100 is a favourite of mine and a great index to trade, and it’s starting to look stuck in its current state as markets try and decide its next direction. With positive news overnight for the UK economy, many people are asking what it will take to see a push through the current ceiling that has formed.

UK economic data was very positive overnight as markets moved on the news that claimant counts dropped by 25 thousand (less than what was forecast though) and overall, that the unemployment rate fell to 7.1% as the economy added 167,000 jobs over the last 3 months -  a figure not seen for 17 years.

What is now expected is action from the Bank of England (BoE), as they have commented that a 7% unemployment rate might warrant rate rises in the economy to keep it in check. However, with the notes that accompanied the recent meeting, members of the BoE were in no rush to push up rates, as they were more inclined to see the recovery strengthen further, and the fall in inflation has given them breathing space.

The FTSE 100 itself is expected to be more bullish though in the long run, as a strong economic performance equates to more aggressive speculation in markets generally and no more so than in equity markets itself. This is also coupled with greater earning potential in the long run which will give a boost to companies listed on the exchange – though market analysts would have priced this in previously.

Source: Blackwell Trader

Market technicals show strong resistance formed at 6801.00, as the market looks for a sign to push through or drop lower. For the most part, RSI is also very high, showcasing the strength of buyers in the last few days. However, despite this pressure numerous times, we have seen strong pullbacks after touching this high. Though in the last 2 touches, the RSI was touching the 70 levels, and we have not yet touched these levels just yet, thus implying that further upward momentum could be a very real possibility.

Source: Blackwell Trader

Overall though, resistance levels can be found at 6801.00 and at 6857.00, while support levels can be found at 6706, 6652 and 6608. It seems unlikely that any further push higher can happen, seeing as the ceiling has been tested so often and is yet to break.

Source: Bloomberg

Currently, the S&P 500 and the Dow Jones have all been moving north over this period of time while the FTSE 100 has stopped in its tracks at this ceiling. Overall market sentiment points to higher conditions as being overbought in this current climate, and that many analysts in the market are now expecting a correction. Either way, the short term opportunity is certainly there when markets find heavy resistance and pull back as we have seen time and time again.

Written by Alex Gurr, Currency Analyst with Blackwell Global.

 

Equity Markets Turn Negative

I am a keen watcher of the Indexes and also an active trader of them. If you have been following me, you would know that I am quite a fan of the FTSE 100, as I think it's a very easy index to trade as it does not offer a lot of surprises...

USDX: Looking to Bounce Back

When looking at the US Dollar Index (USDX), I was surprised to notice a sudden pullback on Thursday afternoon. It turned out that the markets reacted unfavorably to the news that continuous jobless claims increased to just over 350,000 last week...

AUDNZD Set to be Tested by Interest Rate Decision

The AUDNZD is looking a little more resilient after clawing back its recent losses against the Kiwi dollar over the weekend...


Looking for the GBPJPY to retrace

I have been a big fan of trading against the JPY since the autumn period. There are signs ahead for future JPY weakness, such as the inevitability for future QE...

Why I am watching the USDX

The US dollar is the cornerstone currency on this planet and as such, 80% of global trading activity done in the currency market involves the USD. One of the most interesting and most commonly traded CFDs/indices is the US dollar index...

Expecting a decline in Gold

Gold has witnessed a slight revival so far this month after hitting a three year low in December, when the Federal Reserve somewhat surprised the markets with a QE taper...


How High Can The GBPAUD Go?

Right now, the AUD is weak. Thursday

AUDNZD: More Movements in the Works

The New Zealand economy has been one of the stars in 2013 of the global developed economies and in 2014, it looks likely that trend is set to continue...

Why I am watching Silver

The Silver market is much like the gold market in a sense. A market where both precious markets are traded heavily on a speculative basis...

  


Share: