FTSE 100 started the week 0.66% lower at 7,310.4 breaking a five-day winning streak as optimism for a deal between China and US fade away. Traders await the GDP data later today to find out if the economy slipped into recession in the third quarter after a contraction in the second quarter. Analysts expect a reading of -0.2% for the quarter.
Last week the UK Services PMI came in at 50, topping forecasts of 49.7 in October and above the previous reading of 49.5. The services sector in UK is the biggest contributor to GDP and the 50 print today indicates that the services sector has turned the momentum to positive and in the upcoming months might break above 50 that will signal expansion for the sector.
UK heads to general election in December that increases the uncertainty for the short term but might clarify the political situation for 2020.
FTSE 100 Support and Resistance
On the technical side, FTSE retreats for the second day from monthly high as the index pierces the 100-day moving average. The index formed a death cross pattern on October 10, as the 50-day moving average crossed below the 200-day MA giving a bearish signal for FTSE.
On the downside, immediate support stands at 7,309.9 today’s low, while a break below that level will open the way for a test of 7,299 the 200-day moving average. Below this level, the next support target comes at 7.281 the 50-day moving average.
On the upside FTSE 100 facing immediate resistance at 7,359 daily high and then at 7,440 the high from September 27th. If FTSE 100 manages to pierce above convincingly could open the way for a move up to 7,580 the August highs.
European equity indices also trading lower today, Dax 30 is 0.22% lower at 13,198 the CAC 40 in Paris trading 0.07% lower at 5,883, In Milan, the FTSE MIB is 0.39% lower at 23,441.