FTSE 100 Gives Back Gains, But The Trend Remains The Same
- The FTSE 100 trend remains short-term bullish above Friday’s low of 6034, but then price is approaching its 200-day-average, which may inspire the bears to take over.
- U.S. ISM Non-Manufacturing is today’s main event and brings enough weight to either make or break the current uptrend.
The FTSE 100 has returned to Tuesday’s breakout level of 6129 and with the trend being bullish above Friday’s low of 6034, some traders may see this pullback as a bullish opportunity.
The next resistance level and equally objective for bullish traders is the January 29 high of 6322. However, the move higher may turn choppy as the FTSE 100 approaches its 200-day- average, now at 6306, and this may encourage traders to enter short positions near its vicinity.
What are Bearish Traders Waiting For?
Traders looking to take advantage of the bearish multi-month trend and the 200-day-average will probably wait for price momentum to turn bearish, something which may happen on a break to Friday’s low of 6034.
In this scenario the FTSE 100 may reach the February 24 low of 5845 followed by the January 20 low of 5598.
Macro-Fundamental Triggers: U.S. ISM Non-Manufacturing
Today’s main event is the U.S. ISM Non-Manufacturing index which carries enough weight to either make or break the current uptrend. A Bloomberg news poll projects an outcome of 53.1 from 53.5 in January. I suspect that the reading must meet expectations for traders to be willing to remain comfortably bullish. On lower than expected figures some traders may head for the exit and drag the FTSE 100 below Friday’s low of 6034, turning the trend bearish.
The U.S. ISM Non-Manufacturing index is important as it gives us clues about the health of the U.S. service sector - the biggest sector of the economy and one which is contributing to growth at a time when the manufacturing sector itself is contracting.
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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