FTSE 100 index poised to pare recent gains based on futures data

UK benchmark FTSE 100 index is down 1.9% in pre-market hours on Friday 24 April 2020, based on IG data.

IG's pre-market FTSE 100 price estimates showed that the index fell by over 100 points to drop below 5720 as at 05:00 GMT on Friday.

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FTSE 100’s up and down week

The Footsie performed much better on Thursday 23 April 2020, with the index closing around 1.4% higher, as the oil price recovery continued across the day.

The FTSE index had plunged under 5650 earlier this week due mainly to the oil price collapse and the UK property market’s slumping demand that had led to the stalling and cancellation of over 500,000 housing sales.

On Tuesday 21 April 2020, UK property development giants Barratt Developments, Taylor Wimpey, and Persimmon each saw their share prices decline by between five and ten percent.

Oil prices had also fallen to historic lows, with spot US crude falling to -$37 per barrel on Wednesday, as oil producers were forced to pay traders to buy oil from them as a result of them running out of storage space in the face of the current coronavirus demand wipe-out.

IG’s oil futures prices also reflected the commodity’s bearishness, with WTI crude and Brent crude futures each plummeting as much as 55.83% and 20.05% to lows of US$7.26 and US$20.11 per barrel respectively.

Since those lows however, oil prices have bounced back strongly, with US crude and Brent crude rallying over 150% and 35% to US$18 per barrel and US$25.50 per barrel respectively.

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Technical analysis: FTSE index could ‘break in a bullish manner’

From a technical standpoint, IG UK senior market analyst Joshua Mahony noted that with the FTSE 100 managing to break through trendline resistance on Thursday morning following overnight losses, ‘the triangle formation seen over the course of April could break in a bullish manner if the index rises through 5849’.

He added that ‘with the 76.4% Fibonacci level up ahead, it is worthwhile watching this area of resistance as a potential turning point for the FTSE’.

‘With the stochastic moving back into overbought territory, there is a chance we could see price start to consolidate or roll over around these levels,’ Mahony wrote, concluding that a bearish outlook would be negated with a break through 5849.

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