Two trades to watch: FTSE, EUR/USD

FTSE trades at monthly low as the mood in the market sours EUR/USD tests 1.21 ahead of German Q4 GDP data

Charts (3)

FTSE trades at monthly low

FTSE trades at 4 week low as the mood in the market deteriorated and investors take risk of the table.

Escalating US – China tensions, mixed Novavax covid vaccine data and concerns over the retail short squeeze trade frenzy over the past few days are all weighing on sentiment heading towards the open.

Here analyst Matthew Weller looks at the retail traders rebellion in more depth.

FTSE technical analysis

The FTSE trades at a 4 week low. It trades below its descending trendline dating back to mid-January  and below its 50 & 100 sma on the 4 hour chart. The 50 sma also crossed below the 100 sma in a bearish signal. 

The RSI is trending lower and in bearish territory and is supportive of more selling action whilst it remains above 30.

The price is testing support at 6435 a level last seen in late December. A break through here could open the door to 6305.

An attempted recovery would need to clear 6550 yesterday’s high in order to advance towards 6650 the confluence of the descending trend line and 50 sma. A break above this level could negate the current bearish trend.

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EUR/USD tests 1.21 ahead of German GDP data

EUR/USD is testing 1.21 amid a downbeat market mood and ahead of the German GDP reading.

Whilst Germany has been in lockdown hitting activity in the service sector, the manufacturing sector has remain resilient. A better than forecast reading could help boost the Euro against the safe haven lifted USD.

French GDP contracted less than forecast in Q4 -1.3% vs -4% expected, annually contracted -8.3% vs 11% forecast.

EUR/USD technical analysis

EUR/USD remains on the defensive after falling through the 50 sma on the 4 hour chart yesterday bringing attention to 1.2050 horizontal support. This appears to be a solid support and may not be easy to break through.

Should the price crack this level, September’s high and key psychological level 1.20 will come into target.

Should 1.21 hold an attempted recovery will see resistance at 1.2140/5 level the confluence of the 50 sma an the descending trendline. A move above 1.2180 could see more bulls jump in.

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