The 6,300 points’ level is the key pivot area for the FTSE 100 this week

This morning I am looking at the FTSE 100 trading just above the 6,300 points and I am wondering what’s next, I am sure a lot of you have been doing the same recently as the London index has been constantly changing its direction over the past couple of weeks.

It is true that the FTSE has fallen victim of the current market volatility in light of the upcoming EU referendum and at the same time the global macroeconomic climate doesn’t seem to settle down. Apart from the uncertainty that comes with the still undecided Remain/Leave vote the climate in the global markets has been shifting back and forth as a result of mixed economic data from abroad.

Just this Friday for example investors were caught off guard when the Non-Farm Payrolls report from the US, a very significant market-moving report, missed its mark by a wide margin. So after a couple of weeks that the Fed hinted than they were moving towards a tighter interest rate policy sometime around the next couple of months now the sentiment is back to being uncertain.

So even though the FTSE looks poised to continue higher given the broader economic sentiment I would be cautious at least until we put the EU referendum behind us. This doesn’t mean that no trades are allowed but it should mean that we need to pick our trades more carefully and only focus on the short-term horizon.

Personally I am focusing on the 6,300 points’ area at this time, if the FTSE manages to remain above this key level then I am confident that we can see an extension towards the 6,380 area on the short term, barring any surprises of course. On the opposite case if the momentum to the upside dies out and the FTSE retreats below the 6,250 points’ support then the 6,200 points’ area and last week’s lows around 6,150 will come into focus.

alpesh

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