FTSE 100: Faders' Market Until After EU Referendum
- The FTSE 100 is a tough market for those seeking momentum, but still offers opportunity
- Choppy trading conditions likely to continue until after EU referendum
- Prior trading range offering support for now, but risk is it will fall back inside
The FTSE 100 has been a difficult index to get a handle on in recent sessions. Late last month it cleared above a price range it held for much of May between ~6050 and ~6240; the same range which kept the FTSE running in place for most of March into April. It acted as though it wanted to consolidate in the mid-6200s after finally clearing above, for another move higher. However, after trading higher yesterday morning to multi-week highs sellers were found.
Yesterday’s bearish price action engulfed the prior three days of side-ways movement, lending to the notion a sustained drop below 6200 could take place. After probing below to a low of 6182, the FTSE is attempting to hang onto the top portion of the zone at this time.
Choppy trading conditions look likely to prevail in the days and weeks ahead, which wouldn’t be all that surprising given the upcoming EU referendum. All-things-UK look poised to find resistance by the opposite side of the market in either direction following any material price swings, as the market squares up ahead of the vote. It is difficult to imagine, without substantial headlines, seeing the FTSE run away in either direction at this time. GBP/USD has had some solid up and down days in recent weeks/months, but the net result has been basically a big fat zero (depending where you start from.)
The type of price action we are presented with makes for a tough-life for those seeking momentum, but offers potential opportunity for traders who feast on fading price swings. A clear daily break below 6200 exposes a steadfast area of support near 6050/6065. If the low-6200 area can hold, which it is doing thus far after failing through, then a swing back higher towards yesterday’s highs near the 6280/300 area remains the bullish proposition. In either direction, taking quick-trades with limited target objectives looks to be the most prudent way to handle this market for the next few weeks.
FTSE 100 (UK100) Daily
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---Written by Paul Robinson, Market Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.