Is FTSE uptrend losing momentum?

Alpesh 75This week has been a smooth one for the FTSE 100 that has shown some amazing resilience recently. With the bank holiday last Monday the UK index had one less session to try and reach the 6,900 points and volatility has been low as the previous uptrend slowed down.

The London benchmark spent most of its time trading slightly above and below the 6,800 points even though the rest of the global markers were quite volatile. The better than expected Services PMI report on Tuesday and the generally positive reports from the rest of the Europe balanced out the risks from the renewed tensions in Ukraine hence the index managed to remain afloat.

Looking forward, there’s a number of events that can decided FTSE’s outlook, the Manufacturing and Industrial Production figures released earlier today printed slightly higher than expected for the UK economy and this is encouraging. However, the recent uptrend looks exhausted and it will take something substantial to re-spark it.

I am looking towards next week’s Advance Retail Sales report from the US and the Quarterly Inflation Report from the Bank of England as potential game changers, I believe that at least until Tuesday or Wednesday the FTSE 100 will not show any excess volatility unless a surprise comes up.

To sum up, I am cautious over the next week’s outlook for the FTSE, from a technical standpoint the uptrend has reached a point of exhaustion but the good economic figures help the index hold on its gains so any prediction is a risky one. I believe that the Retail Sales and the information in the Inflation Report will decide the index’s fate and volatility will again pick up after a direction is found. 

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The 6,760 points area is the pivot point in my analysis and if the FTSE drops below it then the 6,700 points will be the next stop. To the upside, the key resistance lays at the 6,880 points and I believe that the FTSE might find it difficult to overcome it at this point.

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