- FTSE 100 (UK100) pressured by weaker pound
- OIL has some room to extend ongoing bounce
- US dollar index (USDIDX) eyes break to new highs
Most of the major stock markets experienced some kind of a correction during the previous week. The UK FTSE 100 (UK100) was one of the few blue chips indices from developed countries that managed to resist downward pressure. Weakening of the GBP played a vital role as the index is heavily biased towards companies with international exposure. From the technical point of view, we can see that the index was trading within a triangle-shaped consolidation range during the past few weeks. Such patterns usually hint at extension of the current trend. The 200-session moving average can also be found in the vicinity of the upper limit and it is likely to serve as the first target for bulls in the days to come. A break above would allow index to deliver final upward impulse in the 5-wave structure. In such scenario 7500 pts handle would be a level to watch.
Price action on the oil market this week may be interesting as well. Brent (OIL) still trades within an uptrend and the past month of struggle painted a flag pattern on the chart. Realizing potential range of a break higher could take price as high as to $73 (green rectangles on the chart below). In the very same area one can find potential range of a break from the inverse head and shoulders pattern (red rectangles). To give this level even more importance let us note that it also coincides with the 61.8% Fibo level of the major slump started in autumn 2018. Having said that, it can be treated as the key resistance level. However, prior to reaching it bulls will need to smash through the 200-session moving average (in the $69 area at press time).
The US dollar index managed to fully recoup drop from December-January period and is eyeing a break to new highs. The index is trading within an upward channel since mid-2018. Weak NFP report for February triggered a pullback on the USD market but greenback still trades close to 2018 highs. Break above the 97.8 pts handle may herald a surge towards the upper limit of the channel (now around 99 pts). 200-session moving average and lower limit of the channel continue to serve as the nearest support level after halting declines at the beginning of 2019.