Two Trades To Watch: FTSE, Oil

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FTSE falls as retail sales drop and oil slide. Oil prices extend their decline as the EU stays split on a Russian oil embargo.

FTSE falls as retail sales drop, and oil slides

The FTSE is set for a weaker open after retail sales showed that the UK consumer was starting to be affected by rising prices.

UK retail sales unexpectedly dropped to -0.3% MoM in February, down from 1.9% in January. Retail sales are notoriously volatile, and one weak reading doesn’t constitute a new trend. However, with inflation at 6.2% and set to rise to 8%, the squeeze on households’ income will only worsen. The outlook for retailers is particularly gloomy.

Falling oil prices also hit the UK index, pulling oil majors lower.

Where next for the FTSE?

The FTSE extended its rebound from the 2022 low of 6760, hitting resistance at 7520. The price has been consolidating this week, capped on the upside by 7520 and on the lower side by the 50 sma at 7430.

Traders could look for a break-out trade. Sellers would eye a move below the 50 SMA and 7400, a level which has offered support and resistance on several occasions across the past six months. A break below here could open the door to the 7320/10 zone.

Buyers could look for a move above 7520 to bring resistance at 7575, the February 25 high, into play ahead of 7690, and fresh post-pandemic highs.

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Oil prices extend their decline as EU stays split on a Russian oil embargo

Oil fell 2.2% yesterday and is extending the selloff today, although oil is still set to gain around 5% across the week, as volatility in the market continues.

Oil trades under pressure as supply fears ease slightly. Yesterday’s EU leaders meeting with Biden revealed that the EU remains split on whether to impose sanctions on Russian oil.

Furthermore, the US and its allies are considering another release of strategic reserves, bringing more supply to the market.

The news comes as oil inventories in the US sit at the lowest level since 2014.

Looking ahead, US rig count data will be in focus.

Where next for WTI oil prices?

WTI is falling back into the rising channel which dates back to December 20. The RSI remains in bullish territory for now and the 50 sma trades above the 100, suggesting that the picture is still bullish despite today’s pullback.

Support can be seen at 107.00 the March 22 low. However, a move below 102.50 is needed to negate the near-term uptrend bringing 100.00 into play.

Buyers would need a move over 116,00 to create a higher high.

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