FTSE 100 Rallying Into Overbought Territory, Client Sentiment is Mixed


FTSE 100 Price, Chart and Analysis:

  • FTSE is trying to reclaim 6,000 as risk-markets shine.
  • Client sentiment is mixed.

The FTSE 100 is taking its cue from the US and Asia and is pushing higher in early trade and is back above 6,000 for the first time in nearly one month.US markets were firm all last week as investors began pricing in a Joe Biden victory in the US presidential election, while the Nikkei 225 is now back at highs last seen nearly three decades ago. The VIX volatility index has fallen sharply over the last 10 days from a two-month high around 36 to a current level of 26 as investors turn bullish and seek risk.

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While the FTSE may be pressing ahead on positive international drivers, the UK domestic outlook remains cloudy with little progress made on Brexit trade talks. There remains a wide divergence between the two sides on level playing field commitments and fisheries, and while both sides continue to believe that a deal is possible, neither is making a move to break the current impasse.

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The daily FTSE 100 chart remains positive but is showing signs of being overbought. The index has broken above all three moving averages but needs to make a close and open above the 200-day simple moving average to make the move more convincing. The recent series of bullish candles, with higher highs and higher lows, remains intact and the UK big board hit a near one-month high earlier in the session before dipping back below 6,000. A break above 6,042, the October 9 high, opens the way back to the September 15 high at 6,128. Above here the 50% Fibonacci retracement at 6,239 comes into play.

Moving Averages (MA) Explained for Traders

The CCI indicator is flashing an oversold signal currently and this needs to be watched to see if the market becomes even more stretched in the short-term. The chart shows a cluster of old highs and all three moving averages providing levels of support all the way back down to 5,800.

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FTSE 100 Daily Price Chart (March – November 9, 2020)

FTSE 100 Rallying Into Overbought Territory, Client Sentiment is Mixed



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 13% -1% 6%
Weekly -30% 9% -18%

IG client sentiment data show 57.14% of traders are net-long with the ratio of traders long to short at 1.33 to 1.Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed FTSE 100 trading bias.

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What is your view on the FTSE – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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