Another day and another setback in the European stock market, particularly the British FTSE 100 Futures Index. Despite the rather impressive move during the day where the index managed to move back upwards towards the 7,000 mark which, as stated previously, is a rather important resistance. However, reaching that level meant that the index is trying to rally back up and the movement in during the day suggested just that.
Reaching the mentioned resistance, the index encountered the 100-Hour Moving Average (White Line) and simply reacted just as expected with a reversal moving right back below the 50-Hour Moving Average (Blue Line). Today’s opening was of no help as well. Opening so far down, the index sets its eyes on the 6,860 level which is the support that stopped the index from moving underway on Wednesday.
Having already broken through the first level of support at 6,900, the index seems to be held at the 6,875 level just 15 points above the current “floor” of the market at 6,860. The previous “floor”-turned-resistance at 7,000 has become the level which the index needs to break above and by that meaning it has to maintain its movement above it in order to consider that the downward momentum has begun to lose steam until then the index will continue to have too much downward momentum.
Furthermore, the RSI is also showing the same setup. The 60-level is representing the 7,000, which means that breaking above it would actually mean that the downward momentum is starting to lose steam. As long as the index is unable to break above the 60-level on the RSI indicator, the downward momentum will remain in control, probably moving even past the 6,860 reaching new lows.
Currently, the best performers on the FTSE 100 are IAG (+2.15% at £5.99); Mediclinic (+1.53% at £3.45); and Next (+0.70% at £51.70). The worst performers are Royal Bank of Scotland (-4.78% at £2.23); Johnson Matthey (-3.73% at £27.84); and WPP (-3.69% at £8.77).