FTSE 100: Keep It Trapped for Too Long and It will Roar Back
The FTSE 100 remains flat. However, if we were to look at it from a more positive angle, the longer a market trades sideways, the better the trends and momentum will be when following a breakout. In the second chart below you are able to see the price of U.S. crude oil (WTI) in the period from May to June 2015. Crude oil prices traded sideways, but when the price finally breached its range, they never looked back.
The situation for the FTSE 100 is not too different today, however, we do not expect the price to trade sideways for as long as crude oil prices did. There are an ample amount of risk events on tap this week with today’s ISM Services or Friday’s U.S. NFP being the two most likely drivers of a FTSE 100 breakout.
According to a Bloomberg news survey, minor volatility spur reports are also on tap today, namely the Markit UK Services PMI this morning, est. 54.5, and the U.S. ADP report, est. 183k, this afternoon.
Upcoming Risk Events (GMT)
- 09:00 Markit Eurozone Services PMI (Final), est. 54.2
- 09:30 Markit/CIPS UK Services PMI, est. 54.5
- 10:00 E.U. PPI, est.-3.3% YoY
- 13:15 U.S. ADP Employment Change, est. 180k
- 13:30 U.S. Trade Balance, est. -$41b
- 14:45 U.S. Markit US Services PMI (Final), est. 54.5
- 15:00 U.S. ISM Non-Manf. Composite, est. 56.5
FTSE 100 Levels to Watch
The index is trapped within the 6255-6487 range, with a breach of the upper limit probably triggering a rally towards the psychological level of 6600, and 6750 in case of an extension. If we breach the lower end of the 6255-6487 range, we may reach a 6100 level, (61.88% correction of 5875-6487 rally).
FTSE 100: Watch the 6255-6487 Range
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
U.S. Crude Oil (WTI) – Range Breakout
--- Written by Alejandro Zambrano, Market Analyst
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