6790 support, 6840 resistance (at least initially!)

Good morning. Hope those in the UK enjoyed the long weekend. There was a little bit of movement in the FTSE out of hours but of course the wider spread and closed City meant it really was just controlled by the US and Dax. The daily Raff channels for the FTSE are still heading up, though the width has narrowed a bit, with the top now at the all time high level 6930, and the bottom around 6770/6800. Will certainly be interesting to see if the FTSE (and other indices) continue this run. In all likelihood it might well go for it, though a move below that bottom Raff at 6770 will make it considerably harder for the bulls. The market is always bit tricky to call after bank holiday weekend (as you probably saw after the Easter break too), but the main levels I’m watching at 6835 to break for 6870, and 6780 support.

Fairly quiet on the news front really with the Russia embargo/sanctions being the main one, as long as more war rhetoric – which the indices don’t seem too concerned about so far, though gold has risen.

Asia Overnight from Bloomberg
Nickel gained and wheat extended its advance as the conflict in Ukraine’s east intensified. Australian stocks rose while the country’s currency pared gains as the central bank held rates.

Four Ukrainian troops died and 30 were wounded by pro-Russian rebels in Slovyansk, a city in eastern Ukraine, amid reports government forces also killed 20 insurgents. Energy ministers from the Group of Seven nations are discussing ways to reduce Europe’s reliance on Russian supplies of oil and gas in light of the current crisis. The Reserve Bank of Australia kept benchmark borrowing costs at an all-time low, before data onservice industries in the euro zone and the U.K.

“The risk is if you start to get some substantial sanctions imposed that have a significant effect on the orderly functioning of some of these markets,” Victor Thianpiriya, a commodity strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore today. “That’s going to have an impact” on markets from metals to grains to oil, he said.

Bianca Trends
Bianca Trends

Gold
Gold, regarded as a haven investment, fluctuated around yesterday’s close of $1,310.28 an ounce in thespot market. The yellow metal increased more than 2 percent over the previous two trading days. The precious metal touched $1,315.68 in the last session, the highest intraday level since April 15.

Efforts by the government in Kiev to expel insurgents from far eastern regions are at risk of stalling less than three weeks before the country’s presidential elections. Russia’s Foreign Ministry said a “humanitarian catastrophe” is looming in Ukrainian cities blockaded by the country’s military.

German Chancellor Angela Merkel and U.S. President Barack Obama have set the May 25 vote as the trigger for possible economic sanctions against Russia if it fails to pull back its support for separatists.

US
In the U.S. Apple Inc. (AAPL)’s advance above $600 a share for the first time since 2012 helped gains in the S&P 500, which snapped a two-day drop. Amit Daryanani, an analyst at RBC Capital Markets, raised Apple’s 2015 fiscal-year earnings forecast by more than $1 a share and pushed his share-pricetarget up by $20 to $645.

Services in the U.S. picked up in April amid gains in orders and sales that signal even faster growth ahead, data yesterday showed. Industries ranging from retailers to restaurants and construction companies were among the 14 sectors reporting growth for last month as the world’s biggest economy rebounds from a first-quarter stall.

FTSE Outlook

FTSE 100 prediction
FTSE 100 prediction

We are not far off some pretty decent daily support with the bottom of the 10 day Bianca channel at 6791, and the Raffs at 6797 and 6770. As I mentioned above the bulls will be keen to push for new highs if they can keep this momentum going, but will need to break 6835 today, which has been the most recent high. Friday saw a drop from the 6840 level (just short of the short order at 6845), but support levels held well. The Dax yesterday also held onto its bullishness despite a dip to 9400.

If the FTSE does break 6770 then it will be considerably harder for the bulls as it opens up the most likely scenario of a trip down to 6655 (bottom of the 20 day Bianca) and 6600.

There is a rather convoluted trade plan below with trades off the various levels that i am looking at, the main near term levels to watch are the pivot at 6819 for support, then 6791 being the bottom of the the Bianca 10 day, and then the resistance at 6835/40 (we also have a 30 minute channel in play here)

I have put the arrows with a dip to the pivot then a rise to 6840 as the initial movement, however it could well do the reverse and go for 6840 then drop first – always tricky to get a feel after its had a day being controlled by the direction of the other indices.

73 Comments

    1. Was going to ask you for the reasons behind bullishness from yesterday but see you are now out. I am feeling this current rally is almost done – maybe still get above 6850 or even 6900 but momentum seems to be waning, so expectations we will get a decent pull back 6500? later this month. So I am considering a decent sized short in the coming days if i can get my timing right

    2. Hi Hashmash,

      Did u change ur view from VERY BULLISH to sidelines because of this 30pt drop?

      1. i changed my view because i saw a drop in my indicator.
        as DavR0s mentioned, maybe we will see 6850-6900 but im not gonna buy anymore unless my indicator strengthens as well.

  6. think dax will come down to around 9455 or around before ftse makes any move up resistance on dax 9580 hard to break ftse might not get any furthure than 6835 GLA

  7. with strong resistance on dax at 9580 going down to 9455 doubt if ftse will get psst 6835 today

  16. FTSE/4 hrs. — The growth of the last few days of April has eased; it’s now close to zero. It could pick up again, but there’s no sign of that just yet. In the meantime, LinReg 20 has slipped below LinReg 100, and price is falling away from the former — a bearish sort of setup.

  17. This is looking like the drop I was predicting last week is about to happen looking at the 4hr if that’s the case 6500 coming..!

    1. Can see why you closed at 94 as I have resistance R2 there but the 30min chart seems to have broken through the 200ema so I will hang on see if it drops further.

      2. u r rite.. but dow animal is coming out next hour, i don’t want to spoil this play during that time. just watching till dow gets settled

  24. Right, the short I’ve already missed and it doesn’t look it’s going to rise in a hurry. mmm but you never know how US will react. Yesterday they reacted pretty well with long. It might drop to 16465 and turn around, you never know.

  25. Closed my large one around the same as you Marco. Left a small one open though just to see what happens but stop brought up to profit

    1. I reckon looking at chart 2-3 weeks for 6500 and I also think you were wise to hold onto something as looking at 30 min it will go lower

  27. Dow/30 mins. — LinReg 100 flat. LinReg 20 falling sharply, just crossed below LinReg 100. Index lost roughly 60 points since 08:00. Growth indicator negative and pointing down.

  30. Belly looking at wedge forming think this will bounce off 6780 and go long AIMHO

  31. How high do you think ftse will test before dropping down to the 6500. Im tempted to leave a short in place for a bit to see what happens

  35. looks like its going up – good place to buy, im gonna stay on sidelines though

    1. if we see 6780 before market close i will buy again, looks like the dip is a buying opportunity

      1. My bullish has gone (I think) so am now seeking a decent short position on any rise. You still see this going higher from here?

        1. if u ask me currently, then yes i see it going higher – CURRENTLY im back into buying mode….
          but lets see how tomorrow plays out.. 🙂

          1. but im still on sideline im not gonna do anything till tomorrow..unless something happens

  37. We are seeing the weakness in the market that will ultimately I believe take the FTSE down below 6500 by the summer. Probably too early to say but I doubt we will see 6850 again in the near term.
    So I suggest a negative bias for the next 3 months.

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