FTSE 100 Claws Back Losses, But Needs to Break 6012 To Turn Bullish

Talking Points

• The FTSE 100 is short-term bearish below 6012
• Global risk-aversion may keep the FTSE 100 down

The FTSE 100 is short-term bearish below Friday’s high of 6012 and a break to this level will turn the short-term trend bullish with the FTSE 100 possibly rallying to its January 5 high of 6164. Data supporting a bullish case is Friday’s U.S. Non-Farm Payrolls. The U.S. economy added 292,000 jobs in December, beating the Bloomberg news median-forecast which predicted a 200,000 rise.

However, at this stage with the DAX 30, S&P 500, and more importantly the Chinese CSI 300 trending lower, it would be fair to expect a softer FTSE 100 in the days ahead. Risk aversion holds a strong grip on the world’s financial markets and at opening on Sunday, the South African rand slid by 8.62% from its Friday closing price.

Some bearish traders will probably short-sell the FTSE 100 on a bounce, which will likely not exceed Friday’s high of 6012, while others will work with a break to the December 14 low of 5861. A break to this level may open the door for a decline to 6768 which is the August 24 low.

Bullish traders on the other hand will likely wait for a break to Friday’s high of 6012.

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FTSE 100 | FXCM: UK100

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

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00

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