21st May 2019
Global markets have been rattled by the fallout from Donald Trump’s clampdown on Chinese phone maker Huawei amid fears that tech giants are being dragged into the trade war. Google has blocked the company’s access to Android updates following its blacklisting by the US government and reports revealed that major chipmakers are halting shipments to Huawei.
Huawei was added to the US government’s “Entity List” last week, effectively banning American companies from doing business with the Chinese tech giant. The company has been caught in the crossfire between Beijing and the Trump administration amid concerns over its involvement in developing 5G networks. Shares in chipmakers led global markets lower after Huawei suppliers were forced to cut off the company. The Euro Stoxx 50 sank 1.6pc while the FTSE 100 trimmed its losses late in trading, closing down 0.5pc.
Trade war to Tech war
China warns about “unwavering resolve” to fight U.S. “bullying.” China will retaliate after Trump blacklisted Huawei, Beijing’s ambassador to the EU said. “This is wrong behavior, so there will be a necessary response,” Zhang Ming told Bloomberg, describing the action as politically motivated. “The U.S. government is trying to bring down Huawei through administrative means.” Meanwhile, Nike, Adidas and other footwear giants urged Trump to reconsider his tariffs on shoes made in China.
Huawei-Fueled Selloff
Asian stocks are set to decline Tuesday after U.S. tech stocks led a broad selloff. The fallout from the White House’s moves against Huawei reverberated, hitting some of the biggest component makers and fueling more trade angst. The dollar fell against most major currencies, with the Aussie pacing gains. Treasuries declined, with 10-year yields up more than two basis points. Oil rose, while gold was flat.
Asian session
Asian indices were mixed following the negative Wall St lead, although, respite was granted as the US announced a 90-day general license for Huawei
FTSE 100 Trading Signals, Forecast and Prediction
The Asian markets were mixed today after the bearish session yesterday, but futures prices on the S&P and FTSE have risen. The FTSE didn’t quite manage to get down to the 7260 support level yesterday, instead it bottomed out at 7268 and has regained ground since. 7380 still remains as resistance for the moment and a rise to this area still looks possible. The bulls will be keen to defend the 7300 area today, as we have the 30min coral and 200ema there to act as support. That said, the 2 hour chart has gone bearish and is showing resistance at the 7354 level, so whilst not in the trade plan, you could fade a short in at this level then add at 7380 should it get that high.
If the bears were to break below the 7300 level today then I am still looking at support at the 7260 level and think that a long here is worth a go. If the bears were to break below this level then we are looking at a drop down towards 7164 where we have the bottom of the 10 day Raff (Though it is rising still, so this level will move up over the next few sessions).
The bulls are also trying to break above the 25ema on the daily which is at 7330 currently, though again, we have the top of the 20 day Raff at 7370 to act as resistance. If we follow the ASX200’s lead then we are looking at a fairly strong start to today’s proceedings and a likely test of the upper resistance levels (7354 7380). At that point I am thinking that we might well see a bit of profit taking, but should the bulls break 7380 then 7412 is the next level of note.
Whilst I am looking at shorting off those areas we are still fairly bullish at the moment, and buying the dips on the longer timeframes is still working well. The bigger picture charts are showing 7380(today) 7412 (next few sessions) and even 7529 (weekly) as the resistance levels likely to be seen soon, which infers that we may get dips bought into still.
Obviously a flare up in the trade war/tech war/whatever war is likely to cause some ripples again, so its still reacting to the the news flow, but while the fear/greed gauge is low at 34/100 there are still some brave bulls around. That said, the FTSE, Dax, SP and Dow are all showing 2 hour bearish charts, with resistance at 7354, 12208, 2865, 25824 respectively, so its worth keeping an eye on these levels too.
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