Two trade to watch FTSE looks over bought EURUSD tests 123

Fiona Cincotta
By :  ,  Senior Market Analyst
Where next for the FTSE after its stellar run?

• Stocks across the board are pushing higher boosted by the prospect of a Blue wave, shrugging off the storming of Capitol Hill.
• UK steps up its vaccination programme in a race against time to reopen the UK economy
• FTSE set to extend gains after soaring 3.5% in the previous session

The FTSE has been trading in an ascending channel which dates back to early November. Yesterday’s surge, broke the FTSE price out of the upper band of that channel pushing it to a session high of 6859 where it closed. 

Whilst the break-out of the upper band of the ascending channel, and the price trading over the 20 & 50 sma on the daily chart suggest an established bullish trend, the RSI is over 70 in over bought territory which means a pullback could be on the cards. 

Immediate resistance is the key 7000 psychological level, beyond which 7063 high 26 Feb and 7220 high 25 Feb, from there there isn’t much resistance until the pre-pandemic Feb high of 7400.

Immediate support can be seen at 6850 the ascending trendline resistance turned support. A break through here could open the door to 6650, horizontal support which has capped gains across December and 6560 the 20 sma. It would take a break below the lower band of the ascending channel at 6500 to negate the current.

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EUR/USD pulls back but bullish trend remains

• Germany factory orders smashed forecasts +2.3% MoM vs -1.2% exp. 
• Looking ahead EZ retail sales & CPI die at 10:00 GMT
• US Dollar has mixed reactions to Democrat win & Capitol storming. On the one hand it is being boosted by sage haven flows but pressure comes from rising bond yields.
• Jobless claims and covid statistics in focus

EUR/USD trades -0.1% but is still holding above 1.23, after taking three days to find acceptance above the key psychological level. 

It trades above its 20 & 50 sma on the 4 hour chart and above its ascending trendline dating back to early November. The RSI is also in bullish territory, trending high but below over bought levels, suggesting more upside.

However, the recent rally stalled at 1.2350 and has rebounded lower. The bullish trend remains in tact above 1.2250.

Immediate support can be seen at 1.23, should the price break through this key level, the next key support is at 1.2260, the confluence of the 50 sma, the ascending trend line and horizontal support from yesterday’s low. Beyond here  1.2150 and 1.20 come into focus.

On the upside immediate resistance is at 1.2350 a break through here could see the bulls target 1.24.

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Related tags: FTSE 100 EUR USD

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