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FTSE 100: More Pain Ahead

FTSE 100: More Pain Ahead

Alejandro Zambrano, Market Analyst

The FTSE 100 (FXCM: UK100) has now breached its January 26 low of 5767 and is expected to drift to the January 21 low of 5660 over the coming days ahead. Traders not short will most likely use a pullback to the regions of 5800 before turning bearish, as the risk/reward ratio is favourable here.

The overall trend will be bearish below the February 4 high at 5949, which is also the level highlighted last week as a sell zone. Traders need to lift price above this high for bullish positions to be considered.

At this stage, it’s hard to pinpoint exactly what is driving price, yet it may be last week’s strong U.S. labor market report, which suggests that a Fed rate hike is still in play. The unemployment rate dropped to 4.9% from 5% and wage growth increased by 2.5% YoY, solidly beating the 2.2% expected, with the manufacturing sector adding 29k jobs vs. the -2k expected. The latter reading come as a strong surprise given the softness of the manufacturing sector.

There is no more data on tap today and trading should be dominated by technical trading.

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FTSE 100 | FXCM: UK100

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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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