The focus for the FTSE100 this week will be on the recommencement of post-Brexit deal talks between the UK and the EU. So far, negotiations have not gone smoothly, and with less than four months to the December 31 deadline set for the completion of the Brexit process, the pressure is starting to mount on both parties to deliver.
Traders will watch for signs of a breakthrough, which is expected to lift the index. In a recent interview with the Financial Times, the Vice President of the EU Commission, Valdis Dombrovoskis has issued a warning that banks in the city of London could wait longer for market access post-Brexit. He also added that Brussels would “not be ready in the coming month to assess whether Britain qualifies for some pan-EU access rights…”.
However, the UK’s Secretary of State for International Trade Liz Truss was critical of the EU’s positions, accusing the European Union of “failing to stand up for British interests”, and also indicating that potential trade deals with Japan were on the way. These comments were published in The Telegraph newspaper early Monday.
The FTSE100 futures have had a muted start to the week, trading 0.1% higher at 6083.5.
Technical Outlook for FTSE 100
The FTSE100 has found support at the 6067.6 price level, which has been the site of lows seen from June 25 to July 10. If price action for the day can take off from there on market open, we could see a push towards the recent highs at 6325.3. Above this level, 6494.5 forms a potential upside target, being the site of recent highs on June 8 and June 9. The low of March 2 is also found at this level, and the June highs have acted as role-reversed resistance levels following the market drop in March 2020.
On the flip side, a breakdown of the 6067.6 support makes 5951.6 an attractive initial downside target, being the site of previous lows from June 11 to June 15. Below this level, 5809.8 comes into play, with 5632.9 forming the next downside target in the short term.