FTSE Posts a Large Reversal Bar after BoE's Announcement

As of writing, the index was spotted hovering near the key resistance at 7,000 GBP.

BoE intervenes

According to Reuters, the Bank of England said on Wednesday that it will start making short-term purchases of long-term UK government bonds on September 28.

"The purpose of these purchases will be to restore orderly market conditions," the BoE explained.

"The purchases will be carried out on whatever scale is necessary to effect this outcome. BoE stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses."

Moreover, according to the central bank, the purchases will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided. 

After the announcement, the FTSE 100 index jumped sharply, bouncing off key support, and the index turned positive on the day. It looks like the sentiment in the markets could be aided by the BoE steps, at least for today.

Reversal incoming?

If the index closes the day at these levels, a massive bullish pin bar would be formed, likely indicating that the current downtrend might be over. 

In that scenario, we might see a relief rally toward the 7,100 GBP resistance or possibly target the 7,200 GBP zone.

Alternatively, if sentiment deteriorates again during the US session, bears could push the price back to today's lows near 6,880 GBP.