Two trades to watch: FTSE, WTI crude oil

FTSE hits 7000 after record highs on Wall Street and strong GDP growth in China. WTI crude oil heads higher for a 5th session after breaking out.

Charts (4)

FTSE hits 7000 after upbeat Chines GDP data 

The FTSE has been pushing higher in recent weeks boosted by reopening optimism and the weaker Pound. 

A softer pound has boosted the multinationals which make up the lion’s share of the index 

The UK continues to see covid cases fall and ease lockdown restrictions lifting the more domestically focused stocks on the index. 

Chinese GDP expanding 18.3% YoY and retail sales which jumped to 34% Yoy is buoying sentiment across the board. A strong start to earning season in the US is also underpinning the market. 

Where next for the FTSE 100? 

The FTSE has been trading within an ascending channel since early November. It trades above its upwardly sloping 20 & 50 EMA indicating an established bullish trend. 

After recently break above a key resistance at 6800 the buyers have gained momentum pushing the index higher.  

The index now finds itself at an important resistance level – 7000. This is not only a round number but also a level which capped losses on several occasions across 2019. 

The RSI also finds itself of the edge of overbought territory so we could see a pause here as the index tests this level. 

A break through here could see a strong resistance at 7120 come into play. This is not only again a level which offered support several times in 2019, but is also the upper band of the ascending channel and a trendline dating back to early June. This could prove a tough nut to crack. 

On the flip side, rejection at 7000 could see the index edge lower towards support at 6850 the 20 EMA, ahead of 6800 the resistance turned support, which capped gains for much of this year. It would take a break below here to negate the current near term bullish trend. 

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Oil extends gains around monthly high 

Oil prices are extending gains on Friday, heading for weekly gains of over 6%. It trades around a monthly high. 

The price has been boosted by an improved oil demand outlook and strong economic recoveries in China & US. 

China’s 2021 net crude imports are expected to grow 3.4% in 2021 over 2020. Meanwhile the reopening of the US economy has seen traffic levels increase in various states, according to the Department of Transport.  

Traders are also looking optimistically ahead to US driving season getting underway in the summer. 

Where next for the price of WTI crude oil? 

WTI is extending gains into a 5th consecutive session after break about above the descending trendline dating back to early March. 

The strong bullish signals from the MACD in addition to sustained trading above the upward sloping 20 & 50 EMA favour the bulls. Although there are plenty of points of resistance on the way up. 

Immediate resistance is being tested at the current price of 63.70 high February 25. A break above here could bring 64.00 round number into play ahead of 66.50 and 67.85 March’s high. 

On the downside, failure to retake 63.75 could see oil test its 20 EMA at 61.00. A break below here could negate the near term uptrend. 

 What factors move oil prices?

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