Technical analysis : Will the GB100 rebound continue?

Dmitry Lukashov IFC Markets

Recommendation for GB 100 Index: Buy

Buy Stop: Above 6948.91

Stop Loss: Below 6617.12

RSI: Sell

MACD: Buy

Donchian Channel: Buy

MA(200): Buy

Fractals: Neutral

Parabolic SAR: Buy

Chart analysis

The GB100 technical analysis of the price chart on daily timeframe shows GB100: D1 has retraced above the 12-month high it hit in the beginning of 2021. We believe the bullish momentum will continue after the price breaches above the upper boundary of the Donchian channel at 6948.91. A level above this can be used as an entry point for placing a pending order to buy. The stop loss can be placed below 6617.12. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (6617.12) without reaching the order (6948.91), we recommend cancelling the order: the market has undergone internal changes which were not taken into account

Fundamental analysis

UK economic reports were positive in the second week of April. Will the GB100 rebound continue? UK economic data in the recent week were positive. Both services and manufacturing sectors resumed expanding in March, as did the sales of new vehicles, and construction activities rose more than expected. Thus, the Markit UK Services PMI final reading came in at 56.3 in March 2021 compared with February's 49.5. Readings above 50.0 indicate industry expansion, below indicate contraction. Though it was revised lower from a preliminary estimate of 56.8 the reading signaled the fastest rate of output expansion for seven months. At the same time the Markit Manufacturing PMI was revised higher to 58.9 in March 2021, from a preliminary estimate of 57.9 and above February's 55.1. The reading indicated the steepest month of expansion in factory activity since February 2011. And new car sales in the UK rose 11.5 percent from a year earlier, the first month of sales growth since August 2020. Meanwhile, the Markit UK Construction PMI jumped to 61.7 in March, from 53.3 in the previous month - well above market expectations of 54.6. Improving data are bullish for GB100.

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Author

Dmitry Lukashov

IFC Markets

Dimtry Lukashov is the senior analyst of IFC Markets. He started his professional career in the financial market as a trader interested in stocks and obligations.

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