The FTSE 100 looks set to correct to the downside in the next few weeks as the index continues to struggle back to its all-time high around 7600 in early June. The FTSE still receives the odd hand-up from a weaker GBP, but the recent rhetoric from various MPC members indicates that monetary policy may tighten sooner than expected. And with oil companies a major component of the UK index, the continued weakness in Brent will continue to weigh on the FSTE.
From a technical stance, the index is becoming increasingly over-bought – trading at the 80 level on the stochastic indicator – while the FTSE also is under downside pressure as the 20-day moving average is close to breaking through the 100-day ma, a bearish confirmation. The 50-day ma, currently at 7460, should cap any upside move in the short-term.
Looking at the recent April 19 (7088) to June 2 (7600) trading range, there is Fibonacci resistance at 7481, a high not seen in the last three weeks.
FTSE 100 Daily Timeframe (January 4 – July 13, 2017)
Short FTSE 100 @ Market (Currently 7418)
Stop Loss @ 7481 (Fibonacci)
Target 1 @ 7285 (Fibonacci)
Target 2 @ 7210 (Fibonacci)
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