FTSE 100 Trades Lower Ahead of UK Manufacturing PMI
- The FTSE 100 trades sluggish as it is trapped between strong support and strong resistance.
- In the short-term, the trend is bearish because following the April high of 6432, price has created a lower high on April 27 at the 6344 level.
- This morning, Markit UK PMI Manufacturing for April is on deck and expected to rise from 51 to 51.2.
The FTSE 100 (CFD:UK100) remains sluggish as the April low of 6060 supports price and the November 4 high of 6461 caps it.
Price spent a considerable time supported and limited, by the 6060 and 6461 levels respectively. Between late February and early April, the 6060 level supported the FTSE 100, while price spent two months last year trying to breach the November 4 high of 6461.
It appears now that market participants are hesitating to act and are waiting for a breach to either the 6060 support level or the 6461 resistance level. As strong support and resistance trap price it could explain the sluggish price action since April.
In the short-term, the trend is bearish because following the April high of 6432, price created a lower high on April 27 at the 6344 level. Lower highs and lower lows create a downtrend. Short-term support levels ahead of the April 6060 low are last week’s low of 6222, the April 11 low of 6163, and the April 7 low of 6108.
The April 24 high of 6344 is a short-term resistance level, followed by the April high of 6432 and the November 4 high of 6461.
Overnight, the Caixin China PMI Mfg. for April declined to 49.4 from 49.7 and thereby failed to meet the Bloomberg news projection of 49.8. The business press cited this as a drag on Asian stock market indices, while the FTSE 100 has so far appeared to ignore this news. This morning, Markit UK PMI Manufacturing for April is on deck and expected to rise from 51 to 51.2.
With the UK PMI at level 51 in March, the output growth remained unchanged from February’s seven-month low and manufacturing job losses have been recorded for a third straight month. Rob Dobson, Senior Economist at Markit said that with the industry hovering close to the stagnation mark, it would struggle to make a meaningful contribution to GDP.
FTSE 100 | CFD: 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