FTSE 100: Here’s Why the Blue-Chip Index Could Soar to £7,000

Summary:

The FTSE 100 could soar to £7,000 after it broke out on Friday. Today, the biggest catalyst for the index is the rising hopes that the UK and EU will reach a deal

The FTSE 100 is set to open up by about 0.20% as Brexit talks reach their final stretch. The blue-chip British index is trading at £6,555 in the futures market. This price is the highest it has been since March this year.

The biggest catalyst for the FTSE 100 index is the rising optimism that the UK and the EU will reach a Brexit deal. The talks restarted during the weekend as the European Union made some concessions on fishing. But, there are concerns about whether the UK will accept the new concessions. Also, differences on key competition and fair playing-field rules remain.

The FTSE is also rising after strong trade numbers from China. In a report earlier today, the Chinese bureau of statistics said that the country’s exports increased by 21.1% in November. That was a stronger performance than the 12.0% that analysts were expecting. Also, the value of imports increased by 4.5% leading to a whopping trade surplus of more than $75 billion.

The relatively weaker British pound is also contributing to the performance of the FTSE 100 today.

FTSE 100 technical outlook

On the daily chart below, we see that the FTSE 100 has risen to £6,555. This is an important price action since the index has just broken-out above the previous resistance level of £6,517, which was the highest level in June. It is also being supported by the 25-day and 15-day weighted moving averages.

Therefore, in the near term, I suspect that the index will continue rising as bulls aim for the 78.6% retracement level at £7,063. On the flip side, a move below the 50% retracement at £6,222 will invalidate this trend.