What’s inside:
- The FTSE 100 breaks out to best levels since July of 2015
- Resistance levels to hurdle, support becomes top of month-long range
- Expect trading to be sluggish for remainder of summer without any immediate threats
On Thursday, the FTSE 100 received a spark off support around 6610 following the BoE’s decision to not only cut rates to a record-low 0.25% as expected, but to also expand the current QE program by £60 billion and indicate more easing could come. On Friday, we saw additional follow-through with the help of risk sentiment buoyed after a second month in a row of a much better than expected US jobs report.
The rally pushed the FTSE above the 7/27 high of 6779, furthering the recent advance following ‘Brexit'. Overhead levels from last summer are slowly being challenged one at a time. First the August 2015 peak, which was just surpassed Friday, now the July levels just over 6800, then not far ahead at 6874 is the June 2015 high.
The market could continue to challenge and overtake levels, but we expect the trading to be choppy. For a few of reasons. Firstly, long-term resistance clustered together isn’t often overcome with ease, secondly it’s August, and thirdly, the FTSE is known to be a choppy market to trade. Barring a major global catalyst of the risk-off variety, this is a low volume trading month and needs to be approached with caution.
For now, the before mentioned levels of resistance are in place while support comes in the 6740/79 vicinity, or the top of the range just broken on Friday.
Start using trader sentiment in real-time, check out the DailyFX ‘Speculative Sentiment Index’ (SSI).
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
