FTSE 100 Trading Around Big Support, Eyes on BoE
- FTSE testing very important support
- Clean break of 7100 should see increased selling pressure, strong push higher needed to turn momentum upward
- BoE today could prove to be impactful
On Friday, we were making note of the weak bounce the FTSE 100 was putting in just ahead of old record highs. This is what we had to say last week:
“We’re still sitting close to a big level of support, so any drop from here could find it challenging to gain momentum, but if the FTSE takes out 7100, a clear breach of the old highs, watch for increased selling pressure.”
The whole figure was taken out by a few points to start this morning, but we’re seeing some buying keep the footsie propped up above for now. It’s been flirting with a break all week; 7104 is the old record closing high from 2015, while 7130 was the intra-day record from October we’ve been watching. All-in-all, a strong break of 7100 is what we are looking for if more downside is to come.
Immediate levels on the down-side to watch, should the market break, are at 7067 and then the more important area of support comes around the trend-line(s) off the June lows (clocks in near 7000). The 11/10 spike high of 6997 could coincide.
The decline over the past couple of weeks could come to a halt around current levels, always a possibility as the market gears up for another push higher; we’ll want to see a strong rally off support first, though, before moving ahead with that possibility.
FTSE 100: Daily
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At mid-day (12 GMT) we have the Bank of England policy meeting on the docket. We’re not going to step out on a limb and make any predictions, sticking to the usual discipline of taking a reactionary stance. It’s ‘Super Thursday’ (quarterly inflation report as a bonus), and with that said there is room for increased volatility for ‘all-things-UK’ – keep an eye on GBP, 1-month correlation is at a strongly negative 91% to the FTSE 100.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.