The FTSE 100 is trading lower today in what can be described as end-of-the-month profit-taking by traders, and who can blame them? The FTSE 100 has had its best month on record, currently up by 13.74% as at the time of writing.
A combination of positive coronavirus vaccine news and risky sentiment following the US electoral process’s conclusion has helped the FTSE 100 greatly this month. Only Brexit trade negotiation jitters and the new lockdowns probably prevented the FTSE 100 from gaining more.
Investors remain hopeful of a trade deal at the last moment. Over the weekend, UK Foreign Secretary Dominic Raab said in a Sky News interview that “significant differences” still existed on fishing, but that the Brexit trade negotiations were in a good position.
Today’s decline has found support at the 6325.3 price level. This support has been tested severally without its giving way. If buyers can use this as a springboard to push above 6405.3, then 6514.8 (5/6 June highs) becomes the next target. Above this level, 6599.2 comes into the picture, along with 6739.0 (2 March 2020 high) and 6872.2 (4 March 2020 high).
On the flip side, if 6325.3 gives way to selling pressure as part of a retracement move from the price swing that starts at the 20 March low and ends at the 25 November high, we could look for downside targets at 5632.9 to 5641.1 (50% Fibonacci retracement) or 5436.3 (61.8% Fibonacci retracement and 20 March high). This move would have to take out support at 6200.0 and 6067.6 along the way.
