*Complete technical and fundamental analysis of the FTSE100 stock market index!*
Welcome back to the blog, I hope you had a wonderful weekend. In this blog post I am going to show you my full multi-timeframe technical analysis of the FTSE100 stock market index and also talk to you about my opinions of the fundamental influences on European stocks right now. It has been a while since I have shown you a live market analysis on the blog so I think it will be beneficial for you new traders. Everything I do to technically analyse the markets is simple and uses only basic technical analysis tools and indicators.
Let’s start by looking at the price charts for this index. As I have mentioned many times previously in the blog, I like to do a “top down” technical analysis of instruments I am looking to trade and therefore I will start with the higher timeframe weekly price chart.
The weekly chart hasn’t changed much in the last few weeks. Since the major bullish grenadine break caused by the coronavirus pandemic, price has rallied and is now in its consolidation phase. I still believe this is going to lead in to more downside and that the current price zone will prove to be a lower high that should see price sell-off back down to the 5000 price level where it found support previously this year.
If you look at the zoomed in weekly timeframe price chart you can see a number of bearish weekly candle closures. This gives me confidence that sellers are in control and we are only one or two bad pieces of economic data away from another drop in stock market prices.
On the daily price chart you can see how the rally from the 4800 lows has continued to lose momentum and flatten out in recent weeks. The buyers are running out of steam and losing confidence in the economy recovering like the fiscal stimulus and government wants it to. Another key point of technical analysis is that the 50EMA is below the 200EMA on both the weekly and daily timeframe charts. This is a bearish EMA alignment and is a good sign that the higher timeframe, longer term trend might become bearish.
On the intraday price chart the price action begins to look more choppy but I believe we might see a bearish breakout this week. There was a series of higher lows made over the past 2 weeks and this bullish trendline was broken last week with lower lows made on Friday. If this is a sign of bears taking control then the current lower high that is forming could see price sell-off to new intraday lower lows this week.
Price is current rejecting the broken trendline and both the 50 and 200 EMA’s are in this area. I think if price does rollover from here then we will see new intraday lows this week.
Key levels of support to the downside would be 6000, 5750 and then 5000/4800 longer term.
Economic data/upcoming fundamentals.
Coming up this week we have the U.K. GDP YoY (year on year) and 3-month average. This will likely have a direct impact on the FTSE100 index and the Pound currency. It is almost a certain that GDP will decline but the real move in the markets is created from the current figure vs forecast. The general consensus for YoY GDP is around -21% so a figure worse than this will likely see the FTSE and the Pound sell-off hard.
On the Wednesday there is U.K. core inflation data and later in the week there is U.K. employment rate data and the ECB interest rate decision. This event can often move most major euro currencies and stocks so be aware and make sure your exposure is in check.
I use the DailyFX economic calendar to stay up to date on the key events of the week. You can view it by clicking on the link below.
Yes, Brexit is still lingering and we are still wasting everyones time and tax payers money with pointless negotiations that never lead to anything. The “Brexit” roadmap has continued to change every month and the current situation is outlined in the image below.
As always, if there is any major “progress” made in Brexit negotiations and the deal to the leave the EU later this year then this will have an impact on the FTSE100 index and the Pound currency as well as European stocks and currencies.
We are currently at the stage where “the economy” is reopening, many of us are going back to working almost all industries are now open. However, capacity for business in hospitality and other industries are still restricted and I believe we are still in a period of pricing imbalance between the stock market and actual economy.
Remember, the stock market and the economy are two different things. Fiscal stimulus and monetary policy can help to keep stock markets and the economy afloat but in reality, we have seen only one of these happen. Unemployment is high and increasing, corporate bankruptcies are on the rise and house prices are looking like they will begin to stagnate and fall. These are all economic indicators that are showing bad news yet the stock market still doesn’t seem to be reflecting this in my opinion.
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DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.