FTSE 100 Bounces Slightly As It Nears Its April Lows
- The FTSE 100 was at the time of writing relatively close to the April low of 6060.
- The short-term trend was bearish below the Tuesday afternoon intraday high of 6210.
- Overnight, the Caixin China PMI Services for April declined to 51.8 from 52.2, which suggests that the Chinese service sector is growing at a slower pace than March.
- A Bloomberg News survey calls for the U.K. Services PMI to have remained sluggish as a decline to 53.5 from 53.7 is expected.
The FTSE 100 (CFD: UK100) had bounced slightly from yesterday’s low at the time of writing, but the FTSE 100 could come under pressure again as the short-term trend was bearish below the Tuesday afternoon intraday high of 6210. The trend is bearish below the intraday high of 6210 as it is a lower high in relation to the April 27 high of 6341.
The FTSE 100 was at the time of writing relatively close to the April low of 6060, the decline to this critical support level having been motivated by strong declines in the Basic Material sector (miners), following softer copper prices. The April low of 6060 is a critical support level as it is the most recent swing low of the bullish bias in place since February. Support levels below the 6060 level are the March 10 low of 6006 and followed by the February 24 low of 5841.
Short-term resistance levels are the Tuesday afternoon intraday high of 6210 and the April 27 high of 6341.
In the first three months of 2016, the U.K. Markit/CIPS UK Services PMI was the weakest since the same quarter in 2013. Today’s projection calls for the Services PMI to have remained sluggish as a Bloomberg News survey expects a decline to 53.5 from 53.7. In the PMI report for March, the new business gauge dropped to a new cyclical low and could potentiality explain today’s expected lower reading. The researchers behind the survey, Markit, said last month that the soft global economy growth, fears of a Brexit and the prospect of further government spending cuts has left business confidence low.
Traders will watch the Services PMI report as it may affect the share prices of FTSE 100 firms and it provides hints as to the next move at the Bank of England. Earlier this week the Manufacturing and Construction PMI failed to meet economist’s expectations and hints of a slowdown in the U.K. economy can be seen. Manufacturing PMI slipped to 49.2 from 50.7 and a reading below 50 hints at a contraction of the sector.
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
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