The FTSE100 has continued its free fall on the day as global stock markets were riled by the events in the crude oil sector over the weekend. Russia failed to submit to the demands of OPEC for a 1.5million barrels per day output cut, which caused the collapse of the fragile Russia-Saudi Arabia pact on crude prices. This was followed by a Bloomberg report which quoted Saudi energy ministry officials as saying that Saudi Arabia would ramp up production to 10 million barrels per day and create a price war, prompting a downside gap that caused a 30% slide in crude oil prices.
Shocked by the steep fall in the risky asset, global markets have followed suit, with the FTSE 100 being one of the hardest hit. As at the time of writing, the FTSE 100 has blown through the 6000 level for the first time since 2016.
The FTSE100 has been marked by the biggest fall in UK stocks seen in a decade, with BP and Royal Dutch Shell losing 20% and 14% of their value respectively. Premier Oil and Tullow are also down heavily, shedding 50% and 24% respectively.
Read our Best Trading Ideas for 2020.
Technical Outlook for FTSE100
Price is now testing the 6067.6 support after today’s price action drove the FTSE 100 below the 6000 in a penetrating violation of that support level. The price candle for the week has to close by a 3% penetration to the downside to confirm the price break. This then opens the door towards the 5865.8 price level (previous lows of 17 August 2015 and 20 June 2016), with the Feb 1 2016 low of 5632.9 lurking underneath and waiting to become relevant on continued bearish action.
Any price recovery which results from a failed break of 6067.6 allows the FTSE 100 to retest the 6494.5 and 6739.0 previous support areas, now working as new resistance lines. There is a resistance level at 7127.7, which may become a new target if a price pullback to the upside is able to breach 6739.0.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Eno on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.