Two trades to watch: FTSE as UK lockdown could get tougher, Gold tests key support

FTSE is under pressure at the start of the week. still holds above ascending trend line. Gold tests 200 sma amid a strengthening US Dollar and rising Treasury yields.

Downtrend 2

FTSE under pressure with covid in focus 

  • The broad mood in the market has soured following unexpectedly weak US non-farm payroll data, which saw payrolls shrink by 140,000. 
  • Covid cases in the UK continue to surge remaining above 50,000 new daily cases. The UK government is threatening tighter lockdown restrictions. 
  • The is no major UK data.  

FTSE 100 index chart analysis 

The FTSE is seen consolidating after last week pushing above the upper band of the ascending channel which dates back to early November. So far, since the start of the new year the upside has broadly been capped by 6920, whilst the downside is being held by 6800. 

The FTSE is currently trading at 6860, approximately mid-way between this horizontal channel as it tests support of the upper band of the ascending channel. Should it slip below then a retest of 6800 could be on the cards. Acceptance below here could see the 50 sma on the 4 hour chart at 6675 come into play.

Should the support at 6860 hold the FTSE could look to retest 6920 before a move towards 6990.  

Learn more about trading indices 

Gold rebounds off multi day low, 200 sma in focus 

  • Gold is extending losses on Monday after a slump of over 4% across the previous session amid a strengthening US Dollar and rising treasury yields. 
  • US Dollar Index + 0.27% - the US Dollar usually trades inversely to gold as a stronger greenback  
  • US Treasury yields remain elevated amid growing expectations of additional fiscal stimulus. Weak NFP data added to the case. 

Gold chart analysis 

The Gold price failed to maintain a move higher above the descending channel which has been in place since early August, indicating weakness in the p rice above $1900. 

The Gold price fell through the key 200 sma on the daily chart on Friday and hit a low of $1817 in early trade on Monday although the move lacked follow through 

The precious metal has managed to move back above the 200 sma at 1836. This is remains the key level to watch on the downside before another test of the daily low and the psychological support at $1800. A move toward the November low at $1765 looks unlikely for now. 

Should the 200 sma hold a move back towards the 50 sma at $1868 could be on the cards before Gold makes another attempt to move above the upper band of the descending channel at $1895. 

Learn more about trading precious metal

More from FTSE 100

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.