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The FTSE 100 Index Is Closing in On Pre-pandemic Highs…Here is Why

The FTSE 100 has solidified its advance beyond 6405.3 as it aims to close higher for the 2nd successive session, thus re-establishing the recovery pattern that has allowed it to reclaim 5-month highs. This move comes as Moderna Inc announced 94.5% efficacy of its coronavirus vaccine candidate in clinical trials, which clears the way for the company to apply for emergency use authorization from the FDA. 

Investors on the UK’s leading stock market index cheered the news amid a lockdown which has entered the third week. With expectations of a coronavirus vaccine being made available for use before the year runs out, markets are onboarding risky sentiment, sending stocks higher.

Gainers on the FTSE 100 today include commodity stocks, which also received a significant boost from the better-than-expected Chinese factory and retail sales data. Also, travel stocks such as Rolls Royce and IAG were among the top 5 winners on the FTSE 100 today, contributing to a 1.36% gain seen on the UK index as at the time of writing. 

Technical Outlook for FTSE 100

The FTSE 100 maintains the recovery with today’s move, with an intraday violation of 6405.3 to go with it. The index needs two successive closing penetrations above this resistance to establish a breakout and open the door towards the 9 June high at 6514.8. Further advance beyond this level allows the role reversed lows of 3 March and 5 March to form the new target at 6599.2, as the FTSE 100 aims to recover the 2020 pre-pandemic levels. 

On the other hand, we could see a decline towards 6325.3 (June/July 2020 highs) if there is no confirmatory signal of a breakout beyond 6405.3. Below this level, additional targets to the south are found at the 6200 psychological support and 6067.6 price level (June 2020 lows).

FTSE 100 Daily Chart