FTSE 100 forecast: UK stocks struggle as Nasdaq hits new highs

• FTSE 100 forecast undermined by drop in oil prices, but bullish sentiment across global stock markets means downside limited
• Ceasefire between Iran-Israel boost sentiment towards global stocks
• FTSE inside potential bull flag, awaiting breakout

 

Risk appetite remained firm for global markets following the Israel-Iran ceasefire agreement, sending most global markets higher but not the FTSE – not yet anyway. In the US, the Nasdaq 100 has just hit a new record high after breaking above February’s highs, suggesting investors have shrugged off lingering concerns about trade and tariffs with the July 9 deadline looming. Here, confidence is building that the Federal Reserve will soon start cutting rates again, possibly before September if data points to weakness in inflation. Overnight, markets from Japan to China also rallied. But the commodity-heavy FTSE 100 has remained largely undermined thanks to the big drop in oil prices and as metals have come under pressure, providing some headwinds to oil majors and mining companies. Still, with an overall bullish tone in global markets, the FTSE 100 forecast is positive, and we could see new highs for the UK’s top shares index in the not too distant future as it consolidates its recent gains.

Technical FTSE 100 forecast: bullish consolidation

Despite being weaker today, the FTSE 100 index remains in a strong bullish trend, though lacking momentum.

Source: TradingView.com

 

But with the major global indices suggesting the macro bullish trend has found fresh impetus, the UK index could join the rally soon – especially if oil stops falling. 

For now, the FTSE in an overall consolidation mode, as it declines inside what appears to be a bull flag pattern. A potential break above the resistance trend of this bullish continuation pattern is now needed to trigger technical buying towards the prior all-time high.

Short-term resistance, marking the bear trend of the above mentioned consolidation pattern comes in at 8795-8800 area. Above here, there is not much further resistance until the March all-time high of 8910. Beyond that, the psychologically important 9,000 level will come into view.

In terms of support levels to watch, the area between 8,610 to 8,743 marks an important demand zone as per blue shading on the chart. In particular, 8720/25 is an interesting level within this zone that we are watching closely today.

Should the FTSE fail to find buyers in the abovementioned support area, then this could pave the way for a deeper correction in the days ahead. But we will cross that bridge if and when we get there. For now, the FTSE 100 forecast remains bullish.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R