The Footsie fell 2% on Friday alongside European indices due to risk aversion in the face of global economic worries. The inversion of the US treasury yield curve and weak manufacturing data from the Eurozone sparked worries over the health of the respective economies while Brexit uncertainty persists as the length of the deadline extension approved by the EU hangs on the UK parliament’s next moves. Should PM Theresa May’s unfavorable deal fail to win parliament over, the deadline shortens from May 22nd to April 12th before which parliament must decide on an alternative course of action or face a disorderly exit from the EU. As sentiment turns less optimistic, Markets’ will look to Brexit and Sino-US trade headlines to influence near-term direction on the FTSE .
The FTSE index’s rally to a high of 7350 faced selling pressure on Friday and ended at 7207. The index brought about a bearish view as it broke through support at 7260 and is unlikely to pick up bullish momentum without further clarity on the Brexit front. A trade through the support around the 20-day MA at 7180 would be required to trigger further downside pressure towards lower support levels of 7150, 7110. Meanwhile 7260 level acts as the initial barrier for any upside move on the index.
Support: 7180/ 7150
Resistance: 7260/ 7290