7150 support holds for now | 7225 7310 resistance | 7085 support below | Trade wars | Analysis | live trading room

7150 support holds for now | 7225 7310 resistance | 7085 support below | Trade wars | Analysis | live trading room

14th May 2019

The Dow Jones index plunged more than 2pc yesterday after China ignored Donald Trump’s warnings to hit back in the trade war, slapping higher tariffs on $60bn of US goods.

Wall Street was rattled by Beijing announcing that thousands of US items will be hit with a tariff of up to 25pc from June 1. A tentative truce in the trade war was broken last week after Mr Trump accused Beijing of backtracking on pledges made during months of talks. On Friday, the US lifted tariffs on $200bn of Chinese goods to 25pc from 10pc in the first major escalation in trade tensions this year.

The US president warned this morning China “will be hurt very badly” if it does not strike a trade deal with the US. He cautioned Beijing against retaliating, saying it will “only get worse” for the country.

The Dow Jones, New York’s blue-chip index, slumped as much as 2.3pc at the start of play on rattled US markets following the latest escalation. The Euro Stoxx 50 stabilised around a 1.2pc loss while the FTSE 100 avoided the worst of the rout, dropping just 0.5pc.

Asia Overnight

Tokyo stocks opened sharply lower on Tuesday, extending losses on global markets as the US-China trade war escalated. The benchmark Nikkei 225 index lost 1.78 percent or 377.19 points to 20,814.09 in early trade, while the broader Topix index was down 1.77 percent, or 27.34 points, at 1,513.80. Shares also fell in Seoul and Sydney, while futures signal weaker equities in Hong Kong and China when markets open there. Beijing said on Monday it would raise tariffs on $60 billion worth of US goods from June 1, in retaliation for the latest round of US tariff hikes and Washington’s plans to target almost all Chinese imports.



FTSE 100 Trading Signals, Forecast and Prediction

Was a bit of an interesting one yesterday as we did get a dip and sort of rise, but the lower support at 7150 was the main area once the bears had broken below the 7182 level. However, looking at it now and the small overnight bounce from 7138, this area remains as support for the moment – 7140 to 7180. We have the large 24 point dividend this week as well which will help underpin any bullishness today, and we may well see a bit of a relief rally from this lower support area. If the 7138 overnight low gets broken then I am expecting a drop down towards the 7085 level where we have the bottom of the 10 day Raff channel, and a level that should hold, at least initially.

FTSE 100 Trading Signals, Forecast and Prediction
FTSE 100 Trading Signals, Forecast and Prediction

That said, I expect we may well see a climb today. The lower support held yesterday at the 7150 level and we did see some tentative buying. Asia has been weak but could have been worse overnight, and I am still happy with this support area 7140 to 7180.

That said, with the drop yesterday the 2 hour chart has gone bearish and resistance is at 7183 this morning so we may well see an initial drop down from this level (probably pre market and at the open) before a bounce from the lower supports later on.

The bulls will be keen for a rise towards the 7200 level (previous support becoming resistance) and then the 7227 level above that where we have the 200ema on the 30min, and also just above R1 at 7216.

Daily resistance remains at 7310 for the moment and is still a level worth shorting from. With the weakness over the past few sessions the daily chart has locked in bearishness, with 7325 becoming the 25ema resistance level. As this steadily drops over the next few sessions then it may well tally with that 7310 level. The top of the 20 day Raff is at 7345 so this area is certainly looking key. Definitely keep an eye on this area over the next few sessions.

Recommended Broker


IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!

Membership

If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.

What you get

  • Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
  • Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
  • Telegram live trading room and webinar group membership for discussion and realtime trade updates