The FTSE 100 has enjoyed an increase in value in the midst of the holiday season and it comes as no surprise. After achieving a trade agreement with the EU, Prime Minister Johnson now fully expects his ruling Tory party to approve the document soon. The FTSE 100 is not only enjoying the thrust of better Brexit news, but it is also enjoying the positive winds being generated from US equity markets.
After touching new highs yesterday, the FTSE 100 did reverse lower, but the move was not violent and it came on the heels of a slight downturn also occurring across the ocean in the US. Holiday trading volumes are still light, but make no mistake: there are some financial institutions taking part in the equity markets currently too, who do not want to miss out on an opportunity they feel warrants taking action. While the values of the FTSE 100 may appear over-exuberant to some analysts, and technical traders may be wondering what is next, the belief that the equity index can move higher is evident.
Speculators may feel cautious at these higher levels and wonder if the FTSE is overvalued, but what they should be more concerned about in the near term is the trend. The bullish momentum in the equity markets including the FTSE 100 doesn’t look like it is about to vanish anytime soon. Timing entry points into a market which seems to be within a strong surge upward is difficult, but simple risk management tactics will help. Traders need to attack the FTSE 100 with their stop loss and take profit orders calculated before placing a position.
Interestingly, after making new record highs yesterday, the FTSE 100 has seen a slight reversal lower. Support near the 6575.00 level could prove interesting, and for cautious traders, placing a limit order slightly above this mark to buy into the market may be the appropriate decision. The short term could prove rather choppy, but if the FTSE 100 is able to sustain its current values and not retrace lower too swiftly, another surge of buying momentum may develop.
US future markets are indicating a cautious opening for equity indices which will create some temporary headwinds perhaps for the FTSE 100. Traders who anticipate an additional leg lower cannot be faulted for looking for a quick trade via a selling position. However, risk/reward scenarios continue to indicate that the FTSE 100 may prove that being a buyer with some patience could prove worthwhile near term.
FTSE 100 Index Outlook Short Term:
- Current Resistance: 6650.00
- Current Support: 6575.00
- High Target: 6700.00
- Low Target: 6530.00
