The FTSE declined by 1.13% on Thursday as China threatens to retaliate against the US’s latest round of tariffs. Apart from the prolonged global trade war, the recent US yield curve inversion as well as poor economic data from Germany, the UK as well as China have further deteriorated the global growth outlook. Today, there are no major economic releases out of the UK and the Eurozone to provide direction. The US publishes housing and consumer sentiment data which may influence direction on the FTSE alongside any fresh trade headlines.
The FTSE extended losses by 80 points to end at 7067 on Thursday. The price dropped below the 7110 and traded through 7080 to find support at 7040. Moreover, The RSI reading eased into the oversold territory and formed a higher low while price formed a lower low suggesting that the FTSE may rebound as bearish pressure weakens. Should we see the RSI reading exit the oversold territory coupled with a sustained move above the 7100 level, the price would target the resistance at 7150 followed by the 7190 level near the 200-day MA. Alternately, holding below 7100 would maintain selling pressure while a break below 7040 is required to target the 7000 level followed by 7960.