FTSE100 a buy until April?

Author: Giles Coghlan | Category: News

FTSE 100

One potential reaction from a Brexit deal was a 'buy the rumour sell the fact response'. This did not happen with the GBP finding steady bids through the deal announcement. This is a tell. It means that the narrative to the case for investors waiting on the sidelines for a post Brexit deal makes sense. The price action is helping to affirm that position.

If this is indeed the case then the UK's FTSE 100 could potentially stand to benefit over the course of 2021. Now the UK is currently struggling with a resurgence of COVID-19 and the new variant. This has caused the UK to fall into another lock down. Now with all things being equal the FTSE 100 should stand to gain over the year. Look at Adam's post highlighting this point.

Technical

FTSE 100

One way to play this is to enter on a break of the weekly ascending trend line below. It is a high time frame and it could be played very simply. Stay above the trend line, stay in. Fall below the trend line, get out. It's not rocket science, but sometimes it really doesn't have to be. The assumption would be that it is a trade that could be held until the end of April or possibly longer.

Key Risks

  • Vaccine rollout goes wrong
  • COVID-19 proves resistant to vaccine/large drag on UK economy 
  • UK economy hit by some as yet unknown factor
  • Democrat victory in Georgia run off leads to stock selling on higher taxation fears


For bank trade ideas, check out eFX Plus
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