How to trade the FTSE – Plenty of important news and reports coming our way

Since the last time I wrote to you the FTSE 100 has been through quite a volatile period, dropping lower to test the 5,500 points’ support and this morning we’re looking at the index attempting to build a basis of support above the 5,800 points. I have mentioned many times since the beginning of the year that this is a volatile period for the global financial markets and the stock markets cannot avoid being affected by it.

My advice the last few times I wrote this note to you was to focus on the short-term outlook of the FTSE because with the way news events are coming in and traders are digesting them it’s risky to believe that there’s a stable medium-term outlook for the London index. This week I will advise the same and share with you my personal notes for the next few trading days.

From a technical perspective I pay much attention to the 5,800 points’ level which will act as my pivot level until the end of the week. The FTSE is trading above it at this time but there’s a host of news coming our way so it will be crucial for the outlook of the index to manage to remain afloat. So should the FTSE stay above the 5,800 points’ level then my target for the end of the week is lying around the 5,950 points’ and with an extension up to the 6,000 points’ area. On the other hand, a retreat below this pivotal area will drive us to hunt for the 5,700 points’ lows as the FTSE will be looking for support.

As I just said there are plenty of important reports this week, including the employment report from the UK, the inflation data from the US and also the Retail Sales figures from our domestic economy. All of the above have the potential and I personally believe that they will affect the outlook of the index in the coming days. So to add to my advice above, remain focused on the short-term opportunities that arise, keep your trades quick and targeted and remain on the sidelines when you have no clear view.

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