Two trades to watch: FTSE, Gold

The FTSE eases from post pandemic highs. Gold snaps 7 day run higher.

Gold 5

The FTSE eases from post pandemic highs

The FTSE, along with European peers are set for a mildly weaker start.

Data from China overnight was better than expected with retail sales and industrial production both ahead of estimates. Whilst Chinese data was not as bad as feared, concerns over the property sector remain. Resource stocks in the FTSE are particularly sensitive to growth prospects in China.

President Biden and China’s Xi-Jinping are due to hold a virtual meeting today.

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Where next for the FTSE?

The FTSE extends has been extending its recovery from 6823 the low struck on September 20th. After hitting a post pandemic high of 7405 last week, the price is easing lower.

The index trades above its rising trendline from this date and above the 50 & 100 sma. The RSI is pointing lower but remains firmly in bullish territory suggesting that this is a corrective ease lower.

This remains a buy the dip scenario for now with bulls looking for a move over 7405 for fresh post pandemic highs.

It would take a move 7254 last week’s low to negate the near term uptrend and a move below 7190 the late October low  to expose the 50 sma at 7150.

FTSE chart

Gold snaps 7 day run higher

Gold is easing back from a 5 month high after 7 straight days of gains, most likely attributed to some profit taking after such a spectacular run.

A weaker US dollar after consumer sentiment unexpectedly dropped to a fresh decade low, is pulling on the greenback in addition to weaker yields.

Investors will look ahead to the release of Empire State Manufacturing Index in the US session for further clues. Until then the US dollar and yields are likely to drive movement.

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Where next for Gold prices?

Gold broke out over a descending trendline and a 4-month horizontal resistance last week, booking its best weekly performance since May. The price found resistance at 1875 and is easing lower, pulling the RSI out of overbought territory.

On the upside resistance can be seen at 1875 last week’s high which could open the door to 1900 and June’s high of 1917.

On the flip side bears could test 1834, but it would take a close below 1827 to negate the near-term uptrend and bring the falling trendline support into focus at 1800.

Gold chart


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