The UK stocks are up modestly after the British Parliament voted to instruct the PM Johnson to send a letter to the EU asking for a three-month Brexit extension. The FTSE 100 is up nearly 23 points to 7173.4.
The uncertainty over Brexit is expected to continue to dominate the headlines on Monday as well as during the week ahead. Johnson is pushing to have a so-called “meaningful vote” on the Brexit deal he agreed last week. It’s up to Speaker John Bercow to decide whether to allow the vote to happen on Monday afternoon or no.
Furthermore, Goldman Sachs’s senior market analyst, Ipek Ozkardeskaya, says that Brexit uncertainties “could trigger volatility as that end-month deadline nears”.
The FTSE 100 moved up to 7197.5 this morning before rotating back lower to 7173.4. The price action is trapped in between two important levels – the down-slipping trend line connecting the July and September highs and the horizontal support connecting the August and October lows. The descending trend line is also catching up with the 200 DMA, which currently trends just below the 7250 handle.
On the downside, we expect the horizontal support, located just above the 7000 handle, to provide strong resistance to bears. The last time FTSE 100 traded below the 7000 mark was in February this year.