FTSE bulls target break of 100-D SMA and Fibo confluence for run to 7200 psychological level

• The FTSE 100 closed the last trading day of January higher by 0.39% to 6,968.85, despite a stronger pound, up vs the dollar by 0.14%, with traders ignoring the European Union's rejection of PM Theresa May's calls to reopen Brexit negotiations.

EU's chief Brexit negotiator, Michel Barnier, proclaimed that the Irish backstop was "part and parcel" of the deal and cannot be renegotiated. However, Foreign Secretary Jeremy Hunt suggested that more time will be required in order to finalise Brexit legislation. 

While Brexit headlines continue to play a roll in the markets, the Fed meeting has superseded politics. The FOMC has turned neutral which has enabled risk and the G10s to rally vs the greenback. Global equity prices are factoring the return of the reflation trade which is helping to buoy prices, with investors taking comfort from the fact the Fed has dropped the phrase "further gradual increases", welcoming Powell's patient wait-and-see policy and scrutiny of global growth while acknowledging that the case for higher rates has weakened.

Domestic data in the UK offered the latest survey from Nationwide. The housing organisation showed that prices had risen by 0.3% M/M in January, beating expectations for a 0.2%increase and the 0.7% drop the month before. The UK consumer confidence survey from GfK showed no change in January, with the index remaining at -14 - Brexit keeping consumers in a state of uncertainty. 

In corporate news, Royal Dutch Shell made the headlines as it posted a 36% jump in full-year earnings and a 32% increase in fourth-quarter earnings.

However, Diageo (DGE) 2,901.50p 4.67% took the top spot ahead of Antofagasta (ANTO) 870.80p 4.59% and Royal Dutch Shell 'A' (RDSA) 2,362.00p 3.78% coming in the top three performers. The worst threee were Smurfit Kappa Group (SKG) 2,192.00p -5.60%, Standard Life Aberdeen (SLA) 251.65p -5.06% and TUI AG Reg Shs (DI) (TUI) 1,154.00p -3.39%. 

FTSE levels

The top flight index is moving along sideways and in the consolidation of the recent surge from earlier this week. The price is holding below the 100-D SMA and has formed a doji daily Japanese candlestick, which could be a warning to the bulls chasing the bid at this critical juncture. However, RSI is positive and leaves space to go on the upside as bulls target a break of the 38.2% Fibo retracement level of the summer 2018 decline at around the 7040s. A break of which opens a run to the late Oct high and 50% Fibo confluence of same decline around the 7200 psychological level.