European Open: UK traders return to their desks (FTSE, GBP/USD)

Asian Indices:

Australia's ASX 200 index fell by -19.8 points (-0.27%) and currently trades at 7,219.00
Japan's Nikkei 225 index has risen by 161.92 points (0.58%) and currently trades at 27,923.49
Hong Kong's Hang Seng index has risen by 229.85 points (1.09%) and currently trades at 21,311.98
China's A50 Index has risen by 163.46 points (1.21%) and currently trades at 13,677.64

UK and Europe:

UK's FTSE 100 futures are currently up 70.5 points (0.94%), the cash market is currently estimated to open at 7,603.45
Euro STOXX 50 futures are currently up 28 points (0.74%), the cash market is closed today.
Germany's DAX futures are currently up 102 points (0.71%), the cash market is closed today.

US Futures:

DJI futures are currently up 140 points (0.43%)
S&P 500 futures are currently up 89.25 points (0.71%)
Nasdaq 100 futures are currently up 22.25 points (0.54%)

Oil prices gapped higher at today’s open after Saudi Arabia raised the price of their crude for July over the weekend. WTI reached a high of $121 before pulling back to $19.70. Gold continues to meander around $1850 as it strugglers to sustain a breakout in either direction. A weekly Doji formed and closed on its 50-week EMA, yet prices are holding above its 200-day MA. Friday’s selloff erased most of Thursday’s gains, which means Thursday’s breakout is unlikely to be part of a bull flag breakout, so we’ll step aside until the picture becomes clearer.

The FTSE 100 is back below 7600:

The FTSE has been closed since Wednesday the 1^st of June, due to the Queen’s Platinum Jubilee celebrations. In Wednesday’s pre-market report we highlighted the potential for the FTSE to roll over, and it did not disappoint as it had its most bearish session in 8-days. It now appears that we have seen an important swing high at 7648.26, which would be its second lower high this year, and it coincides with a sell-signal on the stochastic oscillator.

Futures markets have opened higher which means the cash market is expected to gap higher at the open. We are therefore seeking bearish opportunities within Wednesday’s range particularly below Tuesday’s low of 7591.84. If this is a significant high, take note that the FTSE has twice reverted towards (and traded below) its 200-day average. So we could be looking for another 2-3% move lower.

FTSE 100 trading guide

Potential head and shoulders top on GBP/USD

There’s a couple of potential scenarios on GBP/USD which may be worth exploring, and they both depend on how prices react around the current support zone. A potential head and shoulder top has formed on the 4-hour chart, which project a target around 1.2250 – just below the monthly S1 pivot. A break beneath 1.2456 confirms the bearish reversal pattern, and brings 1.2400 and 1.2350 support zones into focus.

However, with news economic data on the light side we may find volatility is also reduced. In which case we could see prices drift higher from support towards the monthly pivot point. We would then look for evidence of a swing high and seek bearish setups, ahead of an anticipated break lower.

Up Next (Times in BST)

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial 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.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.