Trade of the week: long FTSE 100
This week's strategy is to go long the FTSE 100, with a target around 8,300, and a stop below the recent lows at 8,100 - the index having staunchly defended this level in May, June and July.
(Partial Video Transcript)
Previous Nikkei 225 trading outcome
Chris Beauchamp: Hello and welcome to IG’s “Trade of the week” for the week beginning Monday the 22nd of July. We’ll be looking in a second at the market we've chosen to look at this week, but first we'll go back to last week's trade, which was to go long the Nikkei 225.
This was, sad to say, my idea going long the Nikkei around about current levels of 41,240 or so with our stop, 40,575. Now, that's been negated. On Wednesday, we saw a steep drop for the Nikkei as the risk off move in markets intensified and continue to see losses.
Nikkei's an interesting one because we were really overextended. I think in July we saw the possibility of a pullback, perhaps not quite as sharp or dramatic as this. One to watch though perhaps as we get back to the 50-day moving average that it might yet see a recovery. Certainly the uptrend very, very strong over the past year is not done yet, I suspect.
This week's trading opportunity
Going towards this week, and we're going to stick with indices. This is one for the week beginning Monday the 22nd of July. Long FTSE 100 on this one because we've seen the index full back from its record high in May. It hasn't obviously had much of an upward momentum over the past two months now really, as we draw towards the end of July, or the final week of July.
But what we have seen is a lot of buying above 8,100. We've not had a close below 8,100. Every time we dip down to this level, so you can see that from the end of May all the way through June into July, the buyers do come in to intervene. They haven't been able to drive it higher, but support remains there.
So, we have a definite area to trade against is what we're looking for here again, long the FTSE 100. Ideally, I think we want to see it really push through these late June highs at 8,300. And over the course of time, go back towards the May highs. That's the initial target 8,300. Then on towards 8,470 or so in the highs from May. And going to put our stop down at a nice run number at 8,100 and see if we do get some upside momentum in the FTSE 100 at this week.
So that's IG’s “Trade of the week” for the week beginning Monday the 22nd of July. We're going to go long the FTSE 100, with an initial target of 8,300 and our stop at 8,100.
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