Are FTSE 100 futures heading for a new three-month low?
The blue-chip index is heading lower yet again, with its price moving towards the 6057 support level, which if broken could see it break below 6000 and head towards a new three-month low, according to IG analysts.
The FTSE 100 is heading lower yet again, with yesterday’s gains proving fleeting within a period of downside and, with its price heading back towards the 6057 support level, there is a chance we could see further downside if that 6033-6057 zone is broken, according to IG analyst Josh Mahony.
‘Such a breakdown would signal the possibility of another lower low given the move seen in late July,’ he said. ‘With that in mind, it makes sense to watch for a possible sharp decline from here if that support zone if broken.’
‘Should such a move occur, we would be looking at either a 76.4% retracement (5957), or yet another low (below 5852),’ he added.
FTSE 100 gives up gains on Tuesday amid rising US-China tensions
The blue-chip index slipped back into negative territory on Tuesday closing at 6072 points, as investors grow increasingly concerns about a spike in coronavirus cases around the globe and a rise in US-China tensions.
The US Commerce Department opted to impose even tighter restrictions on Huawei’s access to foreign chip makers, making life more challenging for the Chinese telco at the expense of damaging relations between the world’s two largest economies further.
The new rules imposed by US President Donald Trump’s administration effectively ban non-US chip companies from selling their chips to the Chinese telco without special permissions.
The move makes it extremely difficult for Huawei to source the necessary components it needs from abroad and will likely lead to officials in Beijing retaliating with restrictions of its own.
‘Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology in order to fulfil the policy objectives of the Chinese Communist Party,’ US Commerce Secretary Wilbur Ross said.
‘As we have restricted its access to US technology, Huawei and its affiliates have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests,’ he added. ‘This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.’
FTSE 100 rebound starts to fail
The FTSE 100 rebound seen on Monday has started to fail once more today, with the index falling back towards trendline support, Mahony commented earlier on Tuesday’s session.
‘The wider declines seen throughout the past three-months signal the possibility of another leg lower from here, with lower lows seen since late June,’ he said. ‘The key to whether this is going to be the beginning of another bearish phase is whether price drops below the upcoming 6057 and 6033 support levels.’
‘For now, those levels and the ascending trendline will be critical in determining where we go from here,’ he concluded.
FTSE 100: After-hours trading with IG
IG offers extended hours trading options for the FTSE 100 index and other major indices. Buy long or sell short on the FTSE 100 via CFDs and other instruments provided by IG's market-leading trading solution. Start by opening a live or demo account with IG today.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 30
- The only provider to offer 24-hour pricing
Live prices on most popular markets