15th May 2019
The FTSE 100 clawed back above the 7200 level as the lower support zone at 7140 held during Monday’s sell off, driven by the trade war talk. The index was being led higher in the global rebound by its rallying commodity stocks but it did lag slightly behind its counterparts on the Continent, which were hit harder in yesterday’s trade war wobble.
The Euro Stoxx 50, which tracks eurozone blue-chip stocks, has jumped 1pc while the S&P 500 index in the US has advanced 0.9pc. Bank of America Merrill Lynch believes there is still a short window of two to three weeks for a trade deal to be done between the US and China.
Stocks in the U.S. soared as traders embraced a more hopeful trade outcome. President Trump called on the Federal Reserve to match China’s countermoves, while the Global Times called the trade dispute a “people’s war.” And as tensions flare in Iran, Trump denied he’s preparing troops but promises lots of them if needed.
U.S. equities got a badly needed jolt Tuesday, with all three U.S. benchmarks rising, led by a 1.1% gain for the Nasdaq. The S&P 500 rose for the second time in three days but is still down more than 4% since the president escalated the trade war on May 5. The spat has killed Asia’s rally and eliminated the year’s gains, though futures are trending up.
Trump called on the Fed to “match” China’s moves to offset hardship from rising tariffs while reassuring nervous traders, saying the U.S. has “a dialogue ongoing” with Beijing and that the situation is “going to turn out extremely well.” As the China battle rages and a new one with Europe threatens, tariffs are starting to look like a goal rather than a tactic.
FTSE 100 Trading Signals, Forecast and Prediction
We have the large 24 point dividend today so my bias remains bullish for the moment. The short yesterday failed at the 7225 level but I wasn’t overly confident on it (as expected a rise, but it was a shame we didn’t dip much first thing), and the trade talk, plus the dividend (and a bit of relief!) supported the rise from 7140 yesterday to a high of 7260.
Initially this morning we have fib level resistance at the 7272 level (and this was Fridays resistance level too), but also Fridays’s high at 7286 so we may well rise to this area initially. With Asia breathing a sigh of relief today, and the ASX200 also rising, combined with the divi I am expecting that we will see continued strength today. If we get a small pull back from the 7272/7286 area then we should drop down towards the 30min coral support at 7243, and the 200ema on the 30min chart at 7232. I have put the long order between these two points but this area looks like it would hold an early test this morning.
If the bulls can push past the 7286 level then we still have the daily resistance at the 7310 level and as such a small short at this level is probably worth a go, depending on the time and if it gets near to the close. With the large divi we would expect to see some buying as we approach the bell at 16:30.
If the bears were to break below the 7232 level then the 2 hour chart is now bullish after yesterday and has support at 7192 from both the moving average and the coral line. If we were to get this low then a long here is worth a go I feel, though I am not sure we will see a 70 point drop this morning. You never know though!
We are just nudging above the 10 day Raff channel resistance at 7260 as I write this, and the top of the 20 day Raff and also the 25ema on the daily are at the 7320 level. If we see that area, then its another reason why it will act as resistance. Once the divi is out the way then I think shorts at this area would be good. If the bears were to really go for it again (trade war driven again?) then a break below the 7140 level still shows a test of 7085 as distinctly possible.
So, in a nutshell, looking for a rise towards 7310 today. 7240 and 7192 as support.
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