The FTSE 100 is looking vulnerable again today as movement resumes in the port of Dover after two days of gridlock as an attempt to prevent the spread of a new strain of coronavirus through Europe, putting downside pressure on European equities.
British stocks have been at the center of a risk-off move starting late last week as Brexit concerns resume. Fisheries continue to be the main discussion point in the last leg of talks, as the EU yesterday rejected a proposal from the UK government for a reduction of 35% of the catch in UK waters. The EU is only willing to accept as low as 25%, and this disagreement could see talks go past the December 31st deadline and into the new year, dragging on uncertainty for longer.
Looking ahead at the next two days, a reduction in liquidity may see markets moving rapidly, but the general perception is that there is a lack of direction. Equity markets are currently pending on the resolve of many open fronts like Brexit, the coronavirus pandemic, and the US stimulus bill, and any of these can offer heightened volatility in the days to come, so investors must be aware.
On the daily chart, we can see the FTSE 100 is stuck below the 61.8% Fibonacci level, falling under the 20-day moving average. Momentum indicators have reset the overbought conditions seen last week, so we could see continued buying support up until 6,600, although this area is likely to remain as a strong resistance unless there is a risk event.
To the downside, 6,255 remains as key support as Monday’s retracement was unable to fall below this level, which had previously acted as a barrier for further losses. A break below this level would leave the FTSE 100 exposed until the next support area between 6,160 and 6,110, before risking losing the 6,000 mark.
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