FTSE 100 shed 0.91% to 6,747.10 despite lower sterling, eyes 6535 26th Dec channel low

The key focus remains on Brexit and US/China trade, both of which will be addressed this week. Investors are nervous ahead of the events. The pound has given back some gains on profit-taking ahead of them, although that has not been reflected in the FTSE that had otherwise been pressured by the pound's rally, (having risen around 3.1% vs the USD YTD).

"The strong rise in the value of the pound over the past week or so suggests that investors have already gone a long way to pricing out the risk of a ‘no deal’ Brexit. The legislation now needs to follow suit.  If it does not, the pound will be very exposed to the downside," analysts at Rabobank argued. 

The concerns of a hard Brexit have started to creep their way back into the market sentiment considering the hourglass's granules of sand are wearing thin as we approach Brexit. On that front, we have a hung UK parliament and a stubborn EU. Today, EU spokespersons have reiterated that the Withdrawal Agreement is not up for renegotiation. One of the key sticking points is the Irish backstop. Ireland's deputy Prime Minister, Simon Coveney, speaking to BBC's Andrew Marr, said that the backstop element of the withdrawal agreement is "not going to change" because the EU would not ratify a deal without it.  

Meanwhile, on the corporate front, Ocado Group (OCDO) 966.00p 2.07% lead the leaders, adding relationships with supermarkets in several parts of the world, followed by Rio Tinto (RIO) 3,944.50p 1.71%, ( iron ore prices were higher after the Vale dam collapse in Brazil) and Carnival (CCL) 4,166.00p 1.49%.  The worst of the top flight index were NMC Health (NMC) 2,560.00p -3.98%, ITV (ITV) 128.30p -2.77% and Lloyds Banking Group (LLOY) 57.00p -2.68%.

FTSE levels

Technically, we have a series of supportive lows around a key Fibo that has given out with the price below the 16th Jan swing low and now homing in on S2 located at 6743 ahead of S3 located at 6699 on the daily sticks. Both RSI and MACD lean bearish, and the double top formation at recent daily highs with zero follow-throughs of the Marubozu Japanese candlestick underpins the downside bias as price turns back from descending channel highs and targets the bottom of the channel and fresh daily lows below 6535 26th Dec channel low.