While the short-term trend is bullish, as the April 9 low of 6107 is higher than last week’s low of 6054, the bearish bias following the FTSE 100 reaching the April 21 high of 6433 is still influencing the FTSE 100. We saw this yesterday as the FTSE 100 failed to break above the April 9 high of 6177.
Instead, it appears that price is trading sideways between last week’s low of 6054 and the April 9 high of 6177 and that the true bias of traders might reveal itself first on a break to the 6177-6054 range.
The March 10 low of 6006 and the February 24 low of 5841 are support levels below last week’s low of 6054, while the intraday high of 6210, formed in the afternoon of May 3, and the April 27 high of 6341, are resistance level above the April 9 high of 6177.
The DailyFX Speculative Sentiment Index (SSI) is showing a reading of -1.7, implying that traders are net-short the CFD: UK100 and a contrarian view of herd sentiment suggest the UK100 may drift higher.
Released today are the latest reports on U.K. Manufacturing Production and Industrial Production. A decline by -1.9% YoY from -1.8% for Manufacturing Production is projected as per a Bloomberg News poll. WhileIndustrial Production is expected to contract by 0.4% YoY from a contracting 0.5% in February.
The Manufacturing report is interesting as it gives us an idea of where the U.K. GDP growth might be headed and with the Manufacturing Production expected to contract further, from -1.8%, to -1.9% YoY. The growth prospects for the U.K. economy are not looking good at this moment.
The Manufacturing Production itself has been contracting following a year-on-year basis since mid-last year, and the PMI indicators published last week are suggesting more pain is ahead for the sector. For more on the PMI read GBP/USD Tumbles After Weak Markit/CIPS Manufacturing PMI.
Leave A Comment