So after a week of trading sideways within a limited range the FTSE 100 looks to pick up some momentum today. What I am looking at right now as I am writing this note to you is an attempt to stay above the 6,400 points’ support and look for higher ground.
It makes sense for the London index to try and do that as investors that drove the index above the former resistance barrier at the 6,400 points’ level are now backing their trades. Their way of thinking has a lot to do with the expected monetary policy events scheduled for this week and namely the FOMC meeting on Wednesday.
As we already know the case for the Fed to raise rates right now is out of the question and very difficult for the next 2 months. There is still the chance that they might go ahead and pull the trigger on December but this is not the most likely scenario as it would require more than impressive results across all sectors in the US domestic economy and no headwinds ahead.
The reason I am detailing this to you is because that’s the thought process taking place in the mind of every professional trader and major market participant right now. And that way of thought will affect the way the FTSE 100 will trade ahead of the Fed meeting in 2 days.
So to simplify things I believe that the FTSE will try to remain above the 6,400 points’ support which is a pretty good basis to establish some long positions and look for the index to re-test the previous highs of last week. That is of course if it manages to remain above that support area and for now it seems capable enough.
Again my focus is on the short term as no one knows what Mrs. Yellen and her colleagues will say during their meeting and to tell you the truth I’d rather be out of the market at that time waiting to re-establish positions after I have a much clearer outlook.
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Alpesh Patel uses Sharescope Pro for his investment analysis