FTSE 100 Forms Bullish Flag Amid No-Deal Brexit Fears

The FTSE 100 consolidated in yesterday’s trading despite mixed labor figures from the UK and concerns about a no-deal Brexit. UK’s blue-chip stock index ranged between 7,494.3 and 7,541.9. It finished yesterday’s trading at 7,506.9.

Mixed Employment Figures for November

The claimant count change report for November showed that there were 28,800 people who claimed for unemployment benefits. This was higher than the 21,200 consensus. Average earnings also fell missed forecasts at 3.2% versus 3.4%. Only the unemployment rate came in better than estimates at 3.8%, lower than the 3.9% consensus.

No-Deal Brexit to Weigh Down FTSE 100?

Yesterday, Prime Minister Boris Johnson passed a bill that would keep Parliament from overseeing Brexit negotiations and voting to extend the transition deadline. Analysts think that one year is not enough to discuss extensive trade deals with the EU. This has in turn led to speculations that the UK may end up with a no-deal Brexit which could weigh down the economy.

UK Inflation Data on Tap

For today, the CPI report for November is due at 9:30 am GMT. It is expected that inflation picked up by 1.4% compared to a year ago. Meanwhile, the core reading which excludes volatile items is seen at 1.7%.

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FTSE 100 Outlook

On the hourly time frame, we can see that the consolidation that followed after the strong rally on FTSE 100 has formed what looks like a bullish flag. A close above yesterday’s high around 7,541.2 could mean that the stock index may soon rally to its year-to-date highs around 7,729.7.

On the other hand, a bearish close below yesterday’s low around 7,494.5 could invalidate this otherwise bullish indicator. You can watch out for the area around the 7,400.0 handle where FTSE 100 previously made highs. This price also seems to coincide with the 100 SMA and the rising trend line (from connecting the lows of December 10, December 12, and December 13).

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