14th December 2018
The bulls tried to break the 6910 level yesterday but failed and we spent most of the day looking fairly indecisive, bouncing between 6850 and 6900, as the boost from trade war hopes fizzles out. Treading water almost while waiting for direction. That may have come overnight as we have seen the 6850 level break to test the 6810 support level overnight. If this breaks then 6790 and 6755 loom into view.
The European Central Bank has cut next year’s growth and inflation forecasts for the Eurozone as risks in the global economy continue to pile up, overshadowing the long-awaited end of its quantitative easing stimulus programme. ECB president Mario Draghi warned that “geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility” had increased the risks for the Eurozone outlook. The central bank predicted a gradual economic slowdown, forecasting growth to expand at a pace of 1.7pc next year. Mr Draghi warned that the “overall atmosphere has become one characterized by increased general uncertainty” and the drivers of the region’s recovery are “weaker”.
The ECB also confirmed that it will end its quantitative easing programme this month in a milestone moment for the currency bloc. However, it doesn’t expect to hike rates until “at least through the summer of 2019”. The ECB “sounded a little more concerned about growth” but is still on track to lift interest rates in late 2019, said BNP Paribas Economist Luigi Speranza.
FTSE 100 Trading Signals, Forecast and Prediction
Overnight we have dropped down to test the 6810 support level twice, setting up a bit of a potential double bottom bounce to start us off today. If the bears were to break below this then the next support is at 6785 and looks like it will probably hold, at least an initial test. With the overnight weakness the 2 hour chart has gone bearish, and the bulls failure to break above the 6920 level yesterday keeps things bearish. Despite the weak backdrop the ECB have pulled the plug on further stimulus for the time being at least, but may resume it if warranted in the future. Kind of set themselves up really, by inferring that it was going to be halted so couldn’t then delay it as that would send the wrong message.
Anyway, back to the levels, should the bears break below the 6785 level then the S3 level at 6755 is in play and likely to be tested.
The bulls will need to break above 6860 which is now decent 2 hour resistance, and then 6910 – yesterdays high. There is still the resistance at 6920 where we have a gap, however, their failure to test that yesterday when it was there for the taking shows some hesitancy on their part. If they were able to break 6920 then 6960 is next up, with the daily coral and 10 day Raff channel here. Above this then the 20 day Raff at 7040 is possible, though any attempts at the fabled “Santa Rally” are being firmly sold into still.
Talking of 2 hour resistance, the Dax and S&P are also bearish with resistance at 10866 and 2644 respectively.
Good luck today and have a great weekend.
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