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FTSE 100 Refuses To Trade Higher

FTSE 100 Refuses To Trade Higher

Alejandro Zambrano, Market Analyst


FTSE 100 Refuses To Trade Higher

Frustration is running high amongst FTSE 100 traders as the index remains unchanged since the close on October 22. On this day, Mario Draghi and the ECB let the market know that easier monetary policies are on tap. The DAX has been higher by 4.1% since then, the S&P 500 by 2.4%, whilst the FTSE 100 has remained unchanged.

Looking beyond the near term, a professional money manager we have been in touch with is still optimistic and forecasts that the FTSE 100 will trade higher from current levels as expectations of the index catching up with both the DAX and the S&P 500 occur. Bullish drivers from yesterday’s U.S. data and ECB support are expected to continue to exert influence on the equity market.

U.S. NFPs: The Catalyst for a Break?

A potential catalyst for a breakout is said to be the U.S. NFP this Friday. If the print is better than expected, the U.S. stock markets such as the S&P 500 may trigger a new yearly high and trigger short covering. This would then force the hands of FTSE 100 traders higher.

With this in mind, we reiterate our idea that a break to the upper end of the 6255-6487 range will probably trigger a rally towards the psychological level of 6600 and 6750 in case of an extension. If we break the lower barrier of the 6255-6487 range, we may reach a 6100 level, (61.88% correction to the 5875-6487 rally).

U.S. Jobless claims are on tap and the market consensus expects an outcome of 262K according to a Bloomberg News Survey. Given the FTSE 100’s immunity from many other key indicators, we would argue that a very strong deviation from consensus is needed in order to rock the market.

Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

--- Written by Alejandro Zambrano, Market Analyst

Alejandro Zambrano, | Twitter: @AlexFX00

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.