The FTSE was the underperformer amongst European Indices as it ended virtually flat on Tuesday. The index was hindered by a resurge in the pound owed to positive Brexit headlines suggesting that a deal may be reached by the end of the week at the EU summit. Separately on economic data, the UK unemployment rate ticked higher to 3.9%, employment change declined by 56K and wages growth declined to 3.8%. The data highlights the negative impacts of an uncertain Brexit outcome on the economy ahead of the looming deadline. Traders should continue to monitor Brexit headlines as it ultimately decides direction of the pound and in turn whether the FTSE could move higher.
The FTSE ended 2 points lower at 7211 on Tuesday as price struggled for direction. The index initially tagged resistance at 7240 before trading below the 7200 level whilst managing to hold above the support at 7170. Today look to the 20-period MA around 7200 to determine direction on the FTSE as it acts as dynamic support. Failure to hold above 7200 would lead price lower with a break below 7170 required to target the lower levels at 7150 and 7130. Below the latter level, the FTSE would have negated its most recent higher low suggesting further weakness is in store. On the other hand, holding above the 20-period MA would maintain buying pressure while a break above the resistance zone of 7240/7250 is required to target the higher levels at 7270 and 7290 thereby enabling the formation of a higher high.
Resistance: 7250 /7270