FTSE Stable Ahead Of ECB Conference

Lately, the UK FTSE 100 index is in an up-move, thanks to gains in stocks of major banks and oil companies.

Last week, the IMF decided to continue with the bailout for Greece, and the euro area also gave this nation the firmest offer of debt relief. Markets may therefore be able to avoid another summer of high volatility with respect to Greece. After this statement, banks across Europe have headed up, supporting the FTSE index to surge higher.

Today, shares of Lloyds Bank Group PLC rose to 0.78287 pence per share, 0.9% higher than the close on Friday. Meanwhile, HSBC Holdings PLC and Barclays PLC also climbed 1.2% and 0.9% from the last settlement.

In addition, a rally in oil prices to a seven-month record high of $50/barrel contributed to push the commodity-reliant FTSE 100 up. Markets are eyeing the OPEC meeting, which is scheduled to be held on June 02, for any possibility of cutting output . A reduction in global supply may put upward pressure on the commodity. Consequently, oil companies such as Royal Dutch Shell and BP, 2 of the top 10 companies with the highest market capitalization, may see some positive changes in their stock prices.

The UK economy still remains subdued as indicated by recent data released. The Office for National Statistics reported last week that business investment for the first quarter in 2016 was estimated to decline 0.4% from the same period last year, to $43.1 billion. A fall in the investment activity may bring several negative effects to the manufacturing sector.

Meanwhile, ECB is on deck to hold a press conference this Thursday, with investors currently awaiting some clues and statements on what monetary policy may be deployed in the future. The “Brexit” referendum on June 23 is also in focus.

ftse d1

Fig. FTSE D1 Technical Chart

The level 38.2% of the Fibonacci retracement is currently acting as firm support as  prices have constantly been bouncing from this threshold for more than a month. FTSE has been moving in stops and starts for several days before climbing up from this level and breaking through the 23.6% level. ADX (14) is at 31.1135 and pointing upwards, indicating that the up-move is strong. The price is expected to continue surging higher, with upward pressure from the parabolics band below.

Trade suggestion

Buy stop at 6308.32, Stop loss at 6218.77, Take profit at 6392.10

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