FTSE 100 is off to a bullish start in today’s European session. Trading around 6,711.0, the UK’s stock index is up by over 1.10% or 70 points. British stocks seem to still be benefiting from the surprise rate cut from the Federal Reserve yesterday. As reported by my colleague Nikolas Papas, the FTSE 100 rose by 2% after American central bankers cut their official cash rate by half a point.
Leading gains today is British Airways owner IAG whose stock is up by 7.23%. Coming in second is Fresnillo with a 4.81% gain and followed by M&G PLC which is in the green by 4.65%.
Read our Best Trading Ideas for 2020.
Will the FTSE 100 be able to sustain its gains?
Its technical setup does not suggest so. The 4-hour time frame showed that the stock index consolidated in the last few trading days with in an upward slope. Because this follows after a sharp drop, a bearish flag has consequently formed. It’s also worth noting that FTSE 100 found resistance at the 38.2% Fib level when you draw the Fibonacci retracement tool from the high of February 20 to the low of February 28. A close below the last candle’s low at 0.6594 would effectively break the lower-end of the range. It could trigger a drop in the stock index to its recent lows around 6,460.0. If it does not hold, the next support level could be at 6,080.0 where FTSE 100 topped on May 2011 based on the weekly chart.
Don’t miss a beat! Follow us on Telegram and Twitter.
On the other hand, a bullish close above yesterday’s high at 6,847.7 would invalide my bearish assumption. It could instead be a sign that FTSE 100 will soon rally to 7,185.0 where the 100 SMA may provide the index with resistance.More content
- Follow me on Twitter.
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.