FTSE 100 seesaws between the 6,500 and 6,650 points while Greeks vote “No” to austerity measure

The European stock markets have been under pressure over the past couple of weeks due to the developments in Greece and the FTSE 100 couldn’t have avoided being dragged lower. The decision of the Greek government to put Eurozone’s latest proposal to a referendum vote and let its people decide how to respond was bound to put the stock markets under pressure as uncertainty is always a risk for investors.
The FTSE 100 has been trading below the 6,600 points’ barrier throughout last week and this morning the London index opened significantly lower again after the Greeks rejected the institutions’ proposal with a resounding 61% majority. It goes without saying that this development means that the Greek drama will continue and while the country remains in a state of capital controls a possible Grexit is still a threat as the days pass.
However what I believe is crucial to note regarding the FTSE’s reaction all these days is the stubbornness that the index is showing not to break below the 6,500 points’ support floor. I think that from a technical standpoint that reveals that there’s increased conviction over the index’s short-to-medium-term outlook.
To be more precise, I think that investors view the FTSE’s short-term future higher with a view to recover from all the retreat that has seen over the past couple of weeks. The domestic economic progress along with the low-rates environment that will last at least until the end of the year are strong enough fundamental factors to send the index higher as soon as the situation with Greece normalizes, or at least eases a bit.
In my mind, this week traders should look to take advantage of any price action between the 6,500 points’ support and the 6,600-50 points’ resistance as the FTSE will look to consolidate before moving higher again. I don’t think we risk any breaks below the support floor unless Greece suddenly faces an exit from the union and at the same time I think the FTSE will find it hard to break above the 6,650 so soon.
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