- The FTSE 100 trades just shy of 7440 resistance, although yesterday’s relatively small range and tall upper wick shows a hesitancy to break higher. As it currently trades around levels which triggered a -5% and -3.2% decline since October, it would be prudent to expect at least a minor pullback.
- The electronic and electrical equipment sector trades just below multi-year highs and has been the strongest performer these past 5 sessions. Oxford instruments are the strongest performer this year and shows potential for a bull flag. Yet we’d prefer a little mean reversion before jumping in at the highs.
- The Oil & Gas sector remains ‘at the bottom of the barrel’ so to speak, being the weakest performer this past year. Tullow Oil (LON:TLW) is on our radar but, similar to Oxford Instruments (LON:OXIG), needs a pullback of sorts before making it onto the watchlist.
EasyJet PLC (LON:EZJ) CFD/DFT (EZJ): A strong bullish trend has been developing with a timely series of higher lows. A bullish engulfing candle marks a prominent swing low at 1246.50, and the 20-day eMA is providing dynamic support. Prices are now consolidating beneath key resistance at 1367.50 and we’re watching to see if prices break higher.
- Bulls could look for a break above 1367.50 or wait for a daily close confirmation above this level. Alternatively, they could watch to see if this level holds as support and enter during a consolidation period.
- A smaller bullish engulfing candle places near-term support at 1321.50 and could aid with risk management, although the daily trend remains bullish above 1246.50.
- Whilst the initial target is 1443.50, there may also be resistance around 1400 with it being a round number.
Compass Group CFD/DFT (LON:CPG): An ABC corrective pattern appears to have competed around 1900. Stopping just shy of the 38.2% Fibonacci ratio and 200-day eMA, momentum now realigning with the longer-term, bullish trend. A new range is being carved out between 2000 – 2084 and prices have rebounded from the 100-day eMA.
- Bulls could wait for a break above 2084 and target the 2150 high initially. Yet we’re also looking for it to break to new highs, given the strength of the bullish trend this past year.
- If resistance holds, another approach is to enter on dips whilst the 1989-2000 support zone holds in anticipation of a bullish breakout.
- The near-term bullish bias is invalidated with a break below 1989.
Hiscox (LON:HSX) CFD/DFT: Arguably a little premature following such a large drop, but prices are consolidating within a potential dead cat bounce pattern. A dark cloud cover reversal and bearish hammer have formed to show resistance at 1300 although we’d continue to monitor for a potential short whilst prices consolidate beneath 1350 (near the 38.2% Fibonacci levels).
- Bears could wait for range expansion to break beneath the corrective trendline. Alternatively, fade into minor rallies beneath 1350 to assume another leg lower.
- Initial target is the 1140 low.
Price Action Update
- Next PLC (LON:NXT) CFD/DFT (NXT): After breaking out and retesting the corrective channel, prices have rallied and stopped just shy of the record highs. From here, we’d either want to see prices consolidate ahead of a breakout or if it trades directly higher, enter after a period of consolidation.
- Vesuvius PLC (LON:VSVS) CFD/DFT (VSVS): This is still on the short watchlist as it didn’t break the support around 408. However, it’s pulled back to its long-term bearish trendline and the 61.8% resistance level. Still, if bearish momentum returns then we’d still prefer short opportunities, whereas a break above 444 removes it from the watchlist.
- Unite Group PLC (LON:UTG) CFD/DFT (LON:UTG): Initial target achieved and exceeded. After breaking to record highs, price retraced and confirmed support around 1180. Near-term bias remains bullish above 1180 and bearish below. Given the strength of the underlying trend, we’d continue to monitor for potential longs whilst prices hold above 1100.
- Man Group PLC (LON:EMG) CFD/DFT (EMG): 140 proved too strong a level to break and a momentum shift has occurred at the lows. With near-term momentum favouring the bulls, this has been removed from the watchlist.
- Greggs PLC (LON:GRG) CFD/DFT (GRG): Ultimately, we’re waiting for a break above key resistance at 2146 but have noted that a potential bull flag is now forming above 2000. If bearish momentum takes it below the 1950-2000 area it will be removed from the watchlist.
FTSE: The Long & Short Of It | NXT, UTG, EMG, VSVS
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