US-China trade developments prompted sharp declines in global equities with the Footsie posting the least percentage loss amongst European Indices. A brief recovery in oil prices and positive corporate updates out of a FTSE member limited losses induced by China’s retaliatory tariffs against the US’s recent tariff hike which further tainted the global economic outlook. Today, the UK publishes employment data and a positive report may provide temporary relief to the pound and weigh on the FTSE. Nevertheless, the prevailing trade pessimism remains the determinant on the FTSE’s outlook and direction.
The Footsie declined by 0.55% to end at 7163 on Monday. Price traded through the support zone of 7190/7200 to find support at 7160. Meanwhile, the RSI reading has reached the overbought threshold on the daily and 4 hour timeframe suggesting that price could turn higher with the 7200 level now turned to initial resistance followed by the 7260 level around the 20-period MA. Failure to edge above 7200 would maintain bearish pressure with a trade through 7160 required to extend the downtrend towards 7140 and 7070.
Support: 7160/ 7140
Resistance: 7200/ 7260