The FTSE traded 0.90% lower on Tuesday as heightened political tensions in Italy alongside lingering concerns over US-China trade relations weighed on sentiment during the day. Separately in the UK, PM Johnson is set to lead Brexit negotiations with EU officials which markets will tune into as it influences sentiment and the sterling which normally moves in opposition to the FTSE. Apart from Brexit, expect today’s FOMC meeting minutes to influence price action as the prospect of looser monetary policy provides global equities with support and relief amidst slowing global growth.
The FTSE lost 64 points to end at 7125 on Tuesday. The price failed to break above the resistance at 7220 and turned lower to trade below the 20-period MA suggesting the formation of a higher low and an extension of the decline below the 7040 level. Today, look to the 20-period MA around 7160 to determine near-term direction on the FTSE as a sustained move below this level would maintain selling pressure while a break below 7080 would lead the FTSE to a test of the support at 7040 followed by 7000. Alternately, a sustained move above 7160 would lead to a test of the higher resistance levels at 7190 and 7220.