The FTSE traded 0.92% higher on Monday as global markets were catalyzed by hopes of a US-China trade deal. News headlines indicated that the two nations intend on signing their phase 1 agreement and that the US would grant its firms license to do business with Huawei. Today will be a test of whether trade optimism can continue to drive the FTSE higher while a lower pound could help keep the index afloat. Today the UK publishes its services sector PMI figure which follows yesterday’s construction PMI figure that showed a decline from the previous month. Disappointing data would maintain downside pressure on the pound which in turn would buoy the FTSE. Traders should monitor trade and Brexit developments to influence direction on London’s blue-chip index.
The FTSE gained 67 points to close at 7369 on Monday. The support provided by 50-period MA around 7250 served as a point of rebound as the FTSE managed to trade above the 20-perrod around 7300 and finally pressed above the resistance of 7350 to target the resistance at 7375 and 7400. Today, look for a break above 7400 to signal a bullish continuation and target the key resistance at 7440. Moreover, the 4H RSI reading has moved higher however has yet to top itself as did the FTSE in order to sustain buying momentum. Meanwhile, A sustained move below the closing price would indicate selling pressure and a trade below 7350 is required to drive the FTSE towards the lower level at 7335 followed by the support provided by the 20-period MA.
Resistance: 7400 /7440