22nd March 2017
Good morning. Well bear Tuesday certainly kicked in with a vengeance yesterday, though it was a shame that the bulls only managed 7440 before the decline started. Markets were spooked by inflation coming in at 2.3% (real rate probably 23%!) and also mainly the new terror threat which has seen an intelligence led ban on devices on airlines from Middle East destinations by both the UK and USA. Could of course just be something to lend weight to Trumps travel ban as well…
All that triggered a sharp rise in cable back towards 12500, which in turn led to further FTSE 100 weakness. Gold also climbed off the back of a bit of fear amid these worries and that the Trump rally might be faltering. Increasing interest rates last week also starting to throw a spanner in the bull’s plan. We have certainly pulled away from the 72 RSI level we had yesterday with that drop, its now at 45! I still think we will see 6500 on the FTSE 100 this year, and $1500 on gold.
FTSE 100 Outlook and Prediction
The sell off has continued overnight and might well continue a little bit lower still. We have the bottom of the 20 day Raff channel at 7312, and that is just below a fib level at 7318 so I am thinking that we might see a bit of a bounce here. We also have gapped down overnight so might see a bit of a retrace back towards yesterdays closing level. If 7312 breaks then I am watching for the X area as the next area to go long from.
Whilst I am thinking that we will see a dip down this year, this might not be the start – I think it will come later in the year, around August time.
Once again the FTSE 100 seems to have regained its correlation to the GBPUSD rate, and if that breaks above 12500 today then we could see further FTSE 100 weakness.
If the bulls do appear (though it may be a little bit soon as they have had a good run) resistance levels of note X, X and then X.
So, looking at a tentative long at X area initially, and maybe X if it goes lower. Shorts at X are worth a go too.