FTSE 100 Higher On Technical Rebound

FTSE 100 reverses the two days of losses getting a hand from the positive close in Wall Street. In my opinion it is just a technical rebound as the FTSE index tested the 50-day moving average. The same reaction also had the Dow Jones from the 50-day moving average yesterday.

Mixed economic data from China shows that the recovery will not be fast for the countries that lift the lockdown. The Industrial Production in China came in at 3.9%, beating the forecasts of 1.5% in April, while the Retail Sales came in at -7.5%, below the forecasts of -7%, the March reading was at -15.8%. The fixed asset investment reading in China for April was -10.3%, while the forecasts were for -10%.

Minneapolis Fed Kashkari said that prospect of a quick, V-shaped recovery is “off the table, adding that American citizens should expect more than a year of economic hardship ahead while the Fed’s Chairman Powell rejected the case for negative interest rates.

Andrew Bailey in an interview yesterday said that the scenario for a rapid recovery from the current recession projected last week in the BOE monetary report might be too optimistic and added that the risks are to the downside. Governor Bailey also said that the Bank of England is not planning negative interest rates as it would create huge issues for the banking sector.

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FTSE 100 Technical Analysis

FTSE 100 is 1.55% higher at 5,829 as the index managed to rebound from weekly lows after testing the 50-day moving average. The short term technical picture remains positive above the 50-day moving average at 5,721. The long term technical outlook remains bearish as the FTSE index continues to trade below the 100 and 200-day moving averages.

On the upside, first resistance for FTSE 100 index stands at 5,834 the daily high. The next resistance for the FTSE is at 5,910 the high from yesterday’s trading session. If the index breaks above 5,910 the next resistance will be met at 6,000 the high from May 13.

On the other hand, immediate support for the FTSE 100 stands at 5,741 the daily low. If the index breaks lower, the next support is at 5,628 the low from April 22. More support for the FTSE 100 index would be met at 5,410 the low from April 6.

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