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FTSE had a strong four day rally from Friday, up until Wednesday, as it climbed about 8 percent in these four trading days, bolstered by the great performance of Glencore PLC , Anglo American PLC and International Consolidated Airlines Group SA (ICAG SA) .
The Footsie has gained 4 percent so far this week despite the trimming of its weekly gain in the past two days as it fell more than 100 points, after hitting the 6056.00 resistance level on Wednesday, because of a bout of profit taking by the investors.
However, this week 98 out of 100 components of FTSE100 are in positive territory, except Standard Chartered and G4 S. The highest gainer this week is the mining stock Glencore PLC , that has climbed 17.87 percent so far.
The recent rebound in Oil led by the decision of freezing Oil production helped to flip the negative sentiment of investors towards global stocks. Strong rebound in UK's banking sector this week has also boosted The Footsie . However, the FTSE 100 is still down by 4 percent this year.
Fig: FTSE100 Daily Technical Analysis.
On the Daily chart, price in FTSE has currently coincided with 50 day moving average after crossing above it by a strong bullish candle on Wednesday but pulled back lower again in the last two days. Footsie hit the confluence zone of the strong resistance area around 6050.00 and the top of the descending channel on Wednesday at 6056.00, but repealed strongly from there.
Though FTSE has lost some ground in the past two days, but the bullish outlook still prevails because of positive transitions in the global economy, marked by recent positive economic data .The market has recovered after hitting extremely oversold levels, and also stochastics on the Daily chart are indicating strong bullish momentum.
A strong breakout of the current descending channel on the Daily chart would spur the bullish momentum further. A sustained move above 6130.00 would pave the way towards the 6330 level. Conversely, breakdown below the 5880.00 level would invalidate the bullish outlook and a strong breakdown below 5800.00 might lead it towards a free fall to the 5600.00 level.
Buy FTSE100 Digital Call Options above 6132.00 or on a failure to break through 5900. Buy Digital Put Options on a break below 6040.00 or on a test of 6275.00. Bottom Fishing can be attempted by buying Digital Call Options on a test of 5640.00.