FTSE 100: Weak US Jobs Data Spurs Bull-flag Breakout
DailyFX.com -
What’s inside:
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The FTSE 100 breaks out of bull-flag after holding onto support day before
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US jobs data miss triggers rally in US and Europe as Fed rate hike expectations decline
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Targeting August high and upper parallel
When we last discussed the technical landscape of the FTSE 100 (FXCM: UK100) we noted the confluence of support between the lower rising parallel extending back to early July as well as the peak set in July (old resistance, new support).
On Thursday, the FTSE dropped below support during the session, but managed to recover back above on a daily closing basis (which is what matters most). This kept the ongoing bull-flag/channel in play heading into Friday. UK stocks were showing strength prior to the US jobs number, but following the worse-than-expected report (lowering Fed rate hike expectations), the FTSE exploded higher along with U.S. index futures.
The 2%+ rally for the day pushed the UK index well above the top-side of the bull-flag developing since the August high. The sudden explosion higher following the gradual decline puts the path of least resistance clearly in favor of the longs. On further strength the August high at 6956 will come into play, with an extended target set higher at the top-side parallel between roughly 7060 and 7100 (depending on timing given slope of line).
At this time, it would require a break below the Thursday low at 6722 to undermine the overall bullish trend structure in place.
Liquidity will thin out heading into the afternoon with US markets closed in observance of the Labor Day holiday.
FTSE 100 (UK100) Daily
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at probinson@fxcm.com with questions or comments.
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