The FTSE 100 Is On A Roll — But Beware The Bull-Trap 29/12/20

Forex Fraud Analyst Team
Man looking at graphs, data and charts on a window


Markets are taking a fairly standard approach to the interval between the Christmas and New Year holidays. With bears lacking any conviction, it’s the bulls who have control of the markets. Risk is being added to trading books, but occasional pull-backs will prove troublesome for shorter-term traders.

For many who are not already in positions, it will be a case of concentrating on keeping their discipline and patience levels high. There is definitely a sense that it’s too late to buy but also too early to sell.

It’s also worth remembering that although all the signals are pointing in the same direction, the recent price moves are based on low trading volumes and gaps caused by exchanges being closed for several days.


FTSE 100

The benchmark UK equity index continues to build on gains founded on the UK and EU negotiating a trade deal on the 24th of December.


FTSE100 Cash Price Graph

Source: IG


With many firms in the index being multi-nationals that generate profits overseas, the stalling of GBPUSD has offered another kicker. Early trading on Tuesday saw the index up by as much as 1.70%.


GBPUSD Price Graph

Source: IG


Fibonacci retracements have been reliable indicators of price moves in the FTSE 100. The Weekly price chart shows the 50% and 61.8% Fibs offering resistance at 6,235 between May and July and 6,570 earlier in December. A surge in buying activity over the last week has broken the 61.8% resistance.



FTSE 100 Cash Price Graph with some candles highlighted

Source: IG

Trading Volumes

The amounts of shares changing hands will remain a concern for those who went long. The histogram of volume traded on the Daily chart shows the expected seasonal fall away in trading activity has indeed taken place.


FTSE 100 Cash Price Chart with some candles highlighted

Source: IG

Scenario 1

A pull-back to 6,570–6,578 would allow the Hourly 20 SMA to catch up with price. It would also form price revisiting the 61.8% Fib, which provided such resistance earlier in the year. Price does like to revisit earlier resistance levels to confirm them as support. A subsequent kick on from that level would not be surprising.

That entry point, though, requires a lot of patience. With price trading at the 6,645 level, halfway through the morning session in European exchanges, it doesn’t look certain that price will retrace to that extent.


Scenario 2

With the odds stacked against the entry-level of 6,578 coming into play, the far riskier trade is catching a smaller retracement. The 12-month high of 7,693 is some way above current price levels and a move up to that level would represent a 15% appreciation in value.

The potential bull-trap for any over-eager trader is price sliding further. With another extended holiday weekend looming, the safer option would be to trade in a demo account.

Forex Fraud Analyst Team

Latest news

Olympic Legend Usain Bolt Lost $12m in Savings Scam
Usain Bolt loses $12m in an alleged investment scam Jamaican officials and the FBI are investigating investment manager Stocks and Securities Ltd Others are feared caught by the scheme Jamaican Olympic sprinter Usain Bolt has had a $12m savings and investment account he set up for his retirement wiped out. Read more
Phoney Pastors Caught Running $28m Church-Based Ponzi Scheme
Churchgoers targeted by scammers posing as pastors A total of $28m fraudulently taken from largely immigrant community Promises of ‘financial freedom through God’ undone by the fact the project was a massive Ponzi scheme Deception, distraction, and abuse of trust are standard tools of fraudsters. Read more

Safest Forex Brokers 2023

Broker Info Best In Customer Satisfaction Score
#1 AvaTrade LogoYour capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
#2 BlackBull Markets LogoYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
#3 73 % of retail CFD accounts lose money Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
#4 Forex Broker eToro Logo67% of CFD traders lose Founded: 2007 Global CFD & FX Broker
Number One Broker
#5 Plus500 Logo79 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008 Global CFD Provider
Number One Broker
Best Trading App Visit broker

    Forex Fraud Certified Brokers Logo
    AvaTrade logo
    skilling logo
    LegacyFX Small Logo
    HYCM Logo
    IQ Option Logo
    IC Markets Logo
    XM Logo
    BlackBull Markets Logo
    City Index Logo
    Exness Small Logo
    ATFX Logo
    OctaFX Logo