FTSE 100
The recent slide on FTSE 100 was enough to push the UK’s stock index below critical support on the monthly chart. Trading at 6,740, the index is trading below the rising trend line (from connecting the lows of March 2009, February 2016, and January 2019) and the 200 SMA. Concerns about the coronavirus outbreak are to blame for the 10.51% drop in the FTSE 100 last week.
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However, just like other equities markets, it is off to a bullish start to this week’s trading. It is currently up by 1.35% from where it opened. This uptick has been triggered by optimism that policymakers would soon step in to stimulate global growth. There are speculations that central banks would conduct a concerted action of easing rates in an effort to provide monetary stimulus. The expectation is that the RBA would cut rates tomorrow, to be followed by the BOC, and eventually, the Federal Reserve.
Hiscox is leading gains on the FTSE 100 at 7.50%. It is then followed by Fresnillo at 6.00%. In third place is Rentokil Initial with a 5.21% uptick.
If the market’s optimism is sustained, we could see the FTSE 100 trade higher. However, it’s worth pointing out that on the weekly time frame, gains on the index may be limited at 6,922.2. For one, this price coincides with the broken trend line. On top of that, the 38.2% Fib level aligns with this price when you draw the Fibonacci retracement tool from the high of January 19 to last week’s low.
On the other hand, if the optimism wanes, the FTSE 100 may not have the chance to recoup its losses. A close below last week’s low at 6,449.2 could mean that the stock index may soon drop to its June 19, 2016 lows at 5,878.0.