7th February 2019
The FTSE 100 snapped a six-day winning streak after another shock slowdown in German factories fuelled fears that the eurozone is sliding towards recession. German factory orders growth slumped 7pc year-on-year in December, the biggest drop since 2012, as dwindling foreign demand pulled the sector into contraction territory for a second straight month. Economists had expected monthly growth to enjoy a modest rebound but its decline accelerated, sinking 1.6pc.
The woeful data from Germany’s large industrial sector added to mounting fears of stumbling growth in the eurozone. A PMI survey for the currency bloc revealed yesterday that the slowdown has extended into 2019 with growth edging down to its lowest level in more than five years.
The DAX led the move lower on European markets, dropping as much as 0.6pc. The FTSE 100 snapped a six-day winning streak, its best run since April, after Donald Trump’s State of the Union address underwhelmed investors.
The FTSE 100 flirted with positive territory late in trading but was eventually pulled off its near four-month high, closing 4.28 points down at 7,173.09. US stocks also nudged down after Mr Trump provided few clues to trade talks progress and renewed his pledge to build a wall on the Mexican border, stoking worries over another government shutdown.
FTSE 100 Trading Signals, Forecast and Prediction
We saw a bit of consolidation on the FTSE yesterday and a bit frustrating that it just missed both the long and short orders – 7192 and 7140 – as it ranged about in-between those levels. The S&P reacted well at the 2737 short order level and hasn’t risen back to that area since, remaining a bit weaker overnight.
As such I am looking at a couple of key resistance areas on the FTSE for today and think that we may well see a rise to the lower one initially this morning. That level is 7192 and is resistance on the 2 hour chart. Above this then we still have the daily resistance level at 7235 and this level still looks to be worth a short. Should the bulls break above this then the rising Raff channels show resistance at 7247 for the 20 day, and 7353 for the 10 day. The ASX (Australia) had a fairly flat day as well Thursday and hovered around its R1 level of 6100, and the FTSE may do something similar. We have the BoE rate announcements today of course, though unlikely to see any surprises here, with rates raining at 0.75%. That’s followed by the inflation report and asset purchase levels – again no change expected.
Looking at the daily chart there is still a chance that we drop down to the 25ema support area t 6950 before another leg higher. As such I am watching these resistance levels mentioned closely to see if they rebuff the bulls and we Geta. dip down to that area. Of course, the bulls will be keen to hold above 7000 on any dip down, and as the daily support is rising the two may meet around that level early next week.
Should the bears take charge today then initial support is at 7141 where we have S1 and this is also below the cam break out level. As such the bears may well try to gain the momentum back again, and will be trying to drop the FTSE 100 down to S3 at 7100.
With a bearish 2 hour chart now showing resistance at 7192 I am cautiously long to that area then starting to get more bearish, though keeping 7235 in mind. Good luck today.
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