Support 6170 6120 6026 6019
Resistance 6207 6217 6218 6225 6235 6329

Good morning. Here we go then, referendum week and very much a case of trade what you see, not what you think. Would appear that the market is pricing in the UK remaining what with waking up to the FTSE 100 at 6180 this morning, and with the latest polls are neck and neck (but we all now how accurate polls are, cough cough, last election, cough). It’s certainly going to be a tricky week this one.

US & Asia Overnight from Bloomberg

• Latest poll suggests Britons will vote to remain in the EU
• Treasuries retreat with gold, yen as oil rises with copper

Asian stocks rallied with U.K. equities futures and the pound surged by the most since 2009 amid signs Britons are warming toward the European Union ahead of a referendum on Thursday. The yen slumped with Treasuries and gold as haven assets fell out of favor.

The MSCI Asia Pacific Index rose by the most in three weeks as FTSE 100 futures soared as much as 3.3 percent. Sterling jumped after a poll showed the campaign for the U.K. to remain in the EU ahead by three percentage points.

The euro strengthened with high-yielding currencies, while the yen fell for the first time in seven days. Rupee forwards tumbled by the most in 10 months after India’s central bank chief announced he will be stepping down when his term ends in September. Oil rallied with industrial metals as gold retreated from a five-month high.

Investor sentiment in recent weeks has been largely determined by Britain’s debate over whether to stay in the EU and bookmakers’ odds suggest the chances of a ‘Leave’ vote have faded since the murder of pro-European lawmaker Jo Cox on Thursday. A poll taken since the killing and published over the weekend showed 45 percent of voters backed the ‘Remain’ camp, while 42 percent were in favor of a so-called Brexit.

“We are seeing a risk-on move after the latest Brexit poll,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “It may be short-lived and volatility is likely to remain high until Thursday’s vote. This really could still go either way.”

Odds at betting shops suggest there’s a 31 percent chance of Britons voting to leave the EU, down from a record 44 percent before Cox’s death, Oddschecker data show. The referendum is being watched by governments, central banks and investors around the world amid worries that a U.K. withdrawal from the EU could unleash a wave of turmoil across global markets.

Stocks

The MSCI Asia Pacific Index rose 1.4 percent as of 12:09 p.m. Tokyo time, with all 10 industry groups advancing. Japan’s Topix jumped by the most in two months, with exporters including Toyota Motor Corp. and Sony Corp. rallying amid the yen’s retreat. Japanese exports dropped in May for the eighth month in a row, data showed Monday, before a speech by central bank Governor Haruhiko Kuroda.

BHP Billiton Ltd., the world’s largest mining company, gained as much as 3.8 percent in Sydney. Its Brazilian joint venture with Vale SA is exploring ways to restructure about $1.6 billion in loans.

Futures on the FTSE 100 were up 2.8 percent and S&P 500 contracts rose 1.1 percent. SGX Nifty 50 Index futures slid 0.7 percent, foreshadowing losses in Indian equities following central bank Governor Raghuram Rajan’s announcement that he will be leaving the authority.

Currencies

The pound strengthened against all 31 major peers, rising 1.7 percent versus the dollar. The euro appreciated 0.7 percent, while the currencies of Norway and Sweden advanced 1.1 percent. The yen weakened 0.5 percent to 104.63 versus the greenback, having surged 2.7 percent last week as the Bank of Japan refrained from expanding monetary stimulus at a time when Brexit risk was spurring demand for haven assets.

“Although we are likely to see some move in a risk-on direction today, the market will remain much attuned to the risks of volatility around the Brexit vote for the remainder of the week,” Ric Spooner, chief market analyst in Sydney at CMC Markets, said in an e-mail to clients. “Traders and investors will be reluctant to put too much faith in fluctuating pre-vote polls and betting markets. Markets are likely to leave at least some risk premium in valuations until after the Brexit vote.”South Korea’s won as well as the Australian and New Zealand dollars advanced at least 0.7 percent, while China’s yuan gained 0.2 percent in Shanghai. One month non-deliverable forwards on the rupee slipped 0.9 percent.

Nigeria’s naira is expected to slide more than 20 percent to around 250-260 per dollar when the central bank allows the currency of Africa’s biggest economy to float freely on Monday, according to Chapel Hill Denham Securities Ltd., which is based in Lagos. It was pegged at 197-199 through the end of last week, when three-month non-deliverable forwards were trading at 320.

Bonds

U.S. Treasuries due in a decade fell, lifting their yield by four basis points to 1.65 percent. The rate on similar-maturity notes in Japan increased by 1 1/2 basis points to minus 0.14 percent, while Australia’s climbed five basis points to 2.13 percent.

Bonds staged a global rally last week, with yields in Japan, Germany and Switzerland sliding to all-time lows as the potential for a British exit from the EU roiled markets, fueling demand for the safest assets. In keeping interest rates on hold last Wednesday, Federal Reserve Chair Janet Yellen cited the risks posed by the Brexit vote as one reason to stand pat.

Commodities

Gold slipped 1.3 percent after Brexit risk spurred a 1.9 percent surge in the precious metal last week. As of June 14, money managers held the second-biggest bet ever that bullion would rally further, according to U.S. Commodity Futures Trading Commission data.

West Texas Intermediate crude climbed 1.1 percent to $48.49 a barrel, buoyed by a fourth straight decline in the Bloomberg Dollar Spot Index. Russian President Vladimir Putin is considering selling part of oil producer Rosneft OJSC to China and India as he struggles to meet spending commitments before a possible re-election bid in less than two years.

Nickel led gains among industrial metals, rallying 1.6 percent in London. Copper and zinc climbed 0.8 percent.

Corn dropped 2.2 percent after capping a sixth weekly climb on Friday. Soybeans fell 1.5 percent after surging 2.6 percent on Friday. [Bloomberg]

FTSE 100 Outlook and Prediction

One thing is for sure, its going to be a pretty wild week. If in doubt stay out or if trading, trade what you see, not what you think. Since Friday its all looking more bullish now as the market is pricing in the UK staying in the EU. Could well be a week to utilise the binaries and options that lots of platforms offer – namely the One Touch binaries. Quite a useful way of going long or short whilst minimising the risk.

Anyway, for today we look like we might well reach the top of the 20 day Bianca channel at 6218 – there are also a cluster of other resistance levels here as you can see from the list below, so this area might be worth a small short (or load up a binary). Support wise, we have the pivot right down at 6026 (6005 on live charts) but I don’t think we will dip that low (mind you its going to be quite volatile this week so never say never!). More likely is a back test of the R3 level at 6170 to start with then 6114 R2 backtest. 6057 also marks a gap from Fridays closing session, so we might well get a dip down to this level this week to close that gap (you can see the gap on the daily chart).