FTSE 100 Falls Sharply from Resistance; Support at SMAs and Trend Line Eyed
FTSE 100 initially traded higher at the start of today’s European trading but is now facing some downward pressure. The UK’s blue-chip stock index is down roughly 25 points or 0.33% at 7,594.3.
IAG is leading gains with a 4.48% profit. Rolls-Royce is in second with a 3.85% uptick. Meanwhile, the London Stock Exchange is in third at 3.26%. On the other hand, the Ocado Group is leading losers with a 4.48% loss.
Brexit to Come Into Focus?
Now that concerns regarding the US-Iran conflict have been abated, the market’s focus has shifted back to Brexit negotiations. In the next few days, European Union diplomats are scheduled to attend a series of seminars which would guide them in their dealings with the UK when Brexit is finalized. Concerns about a no-deal Brexit could be weighing down FTSE 100 or it could be a technical move.
On the hourly time frame, we can see that the stock index seems to have gotten rejected at resistance. Yesterday’s highs at 7,627.8 may have proven to be too much for buyers. But while FTSE 100 CFD has fallen sharply lower in the past hour, its drop could be limited around 7,585.6. This price presents a confluence of support with the 100 SMA and 200 SMA falling nicely around this level. It also looks to coincide with the area between the 23.6% and 38.2% Fib levels (when you draw the Fibonacci retracement tool from the low of January 8 to today’s Asian session highs). Lastly, the broken falling trend line may also provide the stock index with support at this price. Reversal candlesticks could mean that buyers are priming for another re-test of yesterday’s highs.
On the other hand, if support does not hold, we could see a deeper pullback to the 61.8% Fib level at 7,532.4 where the stock index also bottomed on January 6.