FTSE 100 jumps as bulls need a break above 6,196

Summary:

FTSE 100 started the Tuesday trading session higher mirroring Wall Street, amid hopes of a fresh stimulus in the U.S. and ahead of earnings reports

The FTSE 100 kicked off today’s trading session on a slightly higher note (0.40%), mirroring Wall Street following reports that stimulus measures in the U.S. are rapidly gaining momentum. The jump comes ahead of this week’s earnings releases from several U.K. banks as well as a range of leading U.S. technology firms.

Earnings reports will set the pace

British banking giant Barclays plans to report its earnings tomorrow, while Lloyds will follow on Thursday, NatWest on Friday and HSBC next week. Meanwhile, AstraZeneca will release its quarterly earnings on Thursday.

Reckitt Benckiser (R.B.) is 1.42% lower – at 7,607 – after the company reported £6.9bn in revenues, a 10.8% rise for the first half of this year. Revenues from its hygiene business climbed by 13.9%, to £2.7bn, while the company’s health segment experienced an 8.8% increase, to £4.2bn. The strong growth in revenue attributed to higher demand for disinfectant products amid the Coronavirus outbreak.

In other pandemic-related news, the U.K. eased relatively new quarantine requirements for travellers from Spain, lowering the required duration from 14 to 10 days.

Moreover, yesterday’s announcement that Moderna plans to start testing a Coronavirus vaccine among 30,000 volunteers – as well as positive results from the Pfizer vaccine – did help risky assets.

FTSE 100 technical levels to watch

Although the FTSE 100 is trading 0.40% higher – at 6,129 – it has lost its positive momentum following Friday’s dip below the 50-day moving average. The index may run out of steam, therefore a correction can not be ruled out.

Bullish traders should wait to initiate a long position when the index breaks above the 50-day moving average at 6,196. The next hurdle level for the FTSE 100 is at 6,321, the top from July 21.

Short positions should be safe below the 50-day SMA. Critical support for the index will be met at 5,951 – 100-day moving average. A break below might accelerate the downtrend, targeting 5,646 the low from May 14.