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FTSE 100 Loses Steam As EU Commission President Talks Up No-Deal Brexit

The FTSE 100 index has come under some selling pressure this Wednesday as the European Commission President, Ursula von der Leyen made some negative Brexit-related comments. Her comments are raising some doubts over the potential for a trade deal before the December 31 deadline. 

She indicated that even though both sides had made some progress in the Brexit trade negotiations, key differences still existed on three issues. While she also indicated that the EU would do all that was within its powers to reach a trade deal with the UK, she also remarked that it was also preparing for a no-deal scenario. 

These comments provoked a negative response from traders on the FTSE 100, dampening market optimism. However, downside moves look limited as traders hold out the possibility of a last-minute trade agreement. The FTSE 100 is currently trading at 6414.3 as sellers drive the index 0.68% lower.

Gainers on the FTSE 100 at the moment include United Utilities Group, Melrose Industries, Fresnillo and Compass Group. 

Yesterday’s top gainers find themselves on the other side of the coin today, as Aveva. Lloyds Banking Group, Barclays, Rolls Royce and miners like Rio Tinto register single-digit point moves lower. 

Technical Levels to Watch

As a result of today’s EU dampener on the Brexit trade negotiations, the FTSE 100 lacked follow-through buying momentum following yesterday’s break of the bullish pennant pattern on the daily chart. This still leaves the 6514.8 resistance (8/9 June highs) as the initial target to beat for buyers. 

The FTSE 100 needs buying momentum, possibly off a bounce on the 6405.3 support, to retest and attempt a break of the 6514.8 resistance. A successful break allows for an extension of the breakout move from the pennant, targeting the price projection of 6898.1. This level corresponds to the measured move from the pattern break but requires buyers to take out 6599.2 and 6739.0 along the way. 

Conversely, a breakdown of 6405.3 as a follow-up of today’s bearish move brings 6325.3 into the picture. A price decline below this new support invalidates the pattern and opens the door towards the psychological support at 6200.0 (July 14 and August 11 highs). 6067.6 and 5951.6 make up possible downside targets in the short term.

FTSE 100 Daily Chart