FTSE 100 Eyes a Fresh Six-Month High as Confidence Returns
FTSE 100 Price, Chart and Analysis:
- Positive fundamental backdrop re-starts recent rally.
- Brexit decision will be the next market driver.
- IG client sentiment shows a bullish-contrarian bias.
The FTSE 100 is nudging higher today and is close to highs last seen in early-June. The UK indices have been a noted underperformer against its peers over the last few months and are now trying to play catch-up, although there is still a long way to go. The news yesterday that the Pfizer vaccine has been approved by the UK, and the imminent start of a vaccination program, has helped to re-fuel a rally that had stagnated over the last 2-3 weeks.
The FTSE 100 is displaying a positive technical backdrop but will need another fundamental boost before progress to its next upsides targets can be made. The latest Brexit news and commentary is slightly more positive than of late with Irish Minister for Foreign Affairs and Defence Simon Coveney opining today that there is a good chance a Brexit deal can be made in the next couple of days with the two final issues – fisheries and governance – now left to be solved. This suggests that the level playing field debate is now over, a positive move forward. All to play for but set against an increasingly positive backdrop.
The FTSE 100 daily chart remains positive with the indices trading back above all three moving averages. The medium- and long-term simple moving averages have intersected forming a bullish golden-cross, while the 50% Fibonacci retracement level at 6,234 proved supportive when tested on Monday and Tuesday. The early June double-top around 6,515 is the first upside target followed by the 61.8% Fibonacci retracement level at 6,577.
FTSE 100 Daily Price Chart (February – December 3, 2020)
IG client sentiment data show 47.86% of traders are net-long with the ratio of traders short to long at 1.09 to 1. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger FTSE 100-bullish contrarian trading bias.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.