FTSE 100: Downside Break on Symmetrical Triangle as US-Iran Tensions Escalate

FTSE 100 is off to a bearish start in today’s trading. The UK’s blue-chip stock index is trading almost 0.52% lower at 7,557.6. Meanwhile, FTSE 100 CFDs is being aggressively sold off. It has dropped over 40 points in the past hour from its Asian session highs as it currently trades at 7,547.9.

InvestingCube's S&R Levels

NAS100

NAS100 (11163.8)

In Buy Zone

STOP

BUY

TP1

11479

TP2

11923

Top Performers and Biggest Losers

Imperial Brands led gains at 2.46% after the US FDA announced exemptions in e-cigarette flavors which the company makes. Only pod-based cigarette flavors will be banned (that is, fruit, dessert, and mint) while menthol and tobacco will be allowed. This announcement was less strict than what was initially announced. According to US President Trump in September, all flavors were to be banned in the US beginning on February.

The stock was then followed by BP with a 2.01% uptick. In third was M&G PLC which was up 1.72%.

On the other hand, Hikma Pharmaceutical lost the most at 5.11%. In second was Morrison Supermarkets which was down by 3.47%. Lastly, NMC Healthcare was the third-biggest loser, being in the red by 2.80%.

Risk Aversion Sparked by US-Iran Tensions

It would seem that just like other equities markets, the FTSE 100 is being weighed down by ongoing tensions in the Middle East. Last week, conflict between the US and Iran escalated after the US killed Iranian General Soleimani. Markets are now bracing for a retaliation from Iran. If attacks were to happen to the US or its bases, we can expect a bigger sell-off in equities markets as investors flee to safe haven assets.

Read our Best Trading Ideas for 2020.

FTSE 100 Outlook

On the 4-hour time frame, we can see that FTSE 100 is currently testing support at is higher lows. Actually, if you connect the stock index’ most recent highs, you will see that a symmetrical triangle has become apparent. A bearish close below the triangle would mean that sellers could be more dominant in today’s trading. The next near-term support if the rising trend line does not hold will be around 7,430.0. This price falls between the 100 SMA and 200 SMA. On top of that, it has previously served as a resistance level.

On the other hand, if there are enough buyers in today’s trading, the falling trend line could provide resistance around 7,610.2.

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