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FTSE 100 Still Unable To Break Above 6900

ByThierry Laduguie
Published 09/02/2015, 08:02

On Friday the nonfarm payrolls report came in better than expected but the FTSE and the S&P 500 closed down. More importantly they closed down after an initial rally, an indication that investors are not comfortable holding shares at these levels. It could have been due to geopolitical events in Greece and Ukraine, or perhaps investors are coming to the fact that US interest rates are on their way up. In any case there is resistance below 6900 in the FTSE and in the US the pattern is not clear but it could be a completed expanding triangle.

Yesterday we learned that Chinese imports dropped sharply and more than expected, imports in January were down 20% against a -3% predicted by analysts. This will no doubt trouble investors when the market opens today as the number raises concerns about a deepening slowdown in the world's second largest economy. In Greece the prime minister said the government is determined to end the bailout, Greece is on a collision course with EU leaders, it is now increasingly likely that Greece will exit the euro zone.

Once again we saw a rally to 6886 followed by a reversal. The good nonfarm payrolls report was not enough to push the FTSE to a new high. Unfortunately there are other events in the world that could derail the economic recovery. Investors are aware of the risks so they take profits when they can. The FTSE is above its 200-day moving average which is a positive factor but below the previous high of 6905. The main support is 6681 (200-day moving average) and the main resistance is 6905. As long as the FTSE remains in this range there is a good chance it will break down.

FTSE 100: Daily Chart

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