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FTSE 100 Trades Sideways Amid Rising Crude Oil Prices

FTSE 100 Trades Sideways Amid Rising Crude Oil Prices

2016-04-12 08:30:00
Alejandro Zambrano, Market Analyst
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Talking Points

  • The FTSE 100 remained range bound and prices have been capped by the March 18 high of 6237 and supported by the March 10 low of 6006.
  • Brent Crude oil prices, which are currently showing a strong correlation to the FTSE 100, breached their March high.
  • U.K. inflation figures are on deck today and as per a Bloomberg News survey are expected to rise by 0.4% YoY from 0.3% in February.

This morning the FTSE 100 (FXCM: UK100) remained rangebound as it has been since the end of February.

The price was capped by the March 18 high of 6237 and supported by the March 10 low of 6006. Support levels beyond the 6006 low were the February 22 low of 5913, followed by the February 24 low of 5843. Resistance levels beyond the upper end of the current price range at 6237 remained the December 29 high of 6322, followed by the December 2 high of 6449.

We note that front month Brent Crude Oil Futures prices, which has shown a high daily correlation of +0.91 to the FTSE 100 Futures over the last 12 months, rose above their March high of $42.50 a barrel.

We watch Brent crude oil prices as they have the ability to sway the price of the many energy and commodity related firms of the FTSE 100.

The chart below shows the FTSE 100 (FXCM: UK100) in blue vs. the Brent Crude Oil prices (FXCM: UKOIL) in orange. The chart highlights the correlation from November to the current date and how Brent crude oil prices have breached their highs whilst the FTSE 100 has remained rangebound

FTSE 100 Trades Sideways Amid Rising Crude Oil Prices

Source: Tradingview.com

The latest U.K. inflation report is scheduled to be published today and as per a Bloomberg News survey expected to rise by 0.4% YoY from 0.3% in February. Core inflation is projected to rise by 1.3% from 1.2% in February.

A higher than expected inflation reading may lift U.K. interest rates which would make it slightly more expensive to borrow in GBP and could therefore influence the FTSE 100 companies. A lower than expected inflation reading may have the opposite effect, making it cheaper for FTSE 100 firms to borrow money.

The chart below shows the relevant support and resistance levels for the FTSE 100 (FXCM: UK100).

Our Stock Market forecasts for Q2 2016 are now live on the site. Download them for free.

FTSE 100 | FXCM: UK100

Please add a description for the image.

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

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

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