15th January 2019
The FTSE 100 dipped below the 6860 support area to test a low of 6841 but has bounced back overnight as the Asian markets climbed. The S&P 2569 long did better, and the remainder of that is still running, with the stop now at 2590. The FTSE 100 bulls will need to break 6920 this morning for a push back towards 7000. But we have the crucial Brexit vote in parliament today so expect a choppy day.
The FTSE 100 has suffered its worst day in 2019 after global growth worries were stoked by a collapse in Chinese trade and Eurozone industrial production data. Chinese imports and exports growth contracted sharply in December as the trade war takes hold and Beijing scrambles to battle a domestic slowdown. Exports growth slid 4.4pc year-on-year, hitting a two-year low, while imports contracted for the first time since October 2016, plunging 7.6pc year-on-year.
Meanwhile, Eurozone industrial production growth tumbled to a three-year low in November as a perfect storm of factors paralysed its manufacturers. Led by Germany’s stuttering sector, industrial production growth contracted 1.7pc, the worst reading since February 2016.
Another weak performance in Eurozone factories ignited fears that Germany’s economy plunged into recession in the second half of 2018. Its economy contracted 0.2pc in the third quarter and an expected rebound has failed to materialise.
The “yellow vest” protests in France, the Italy budget row, the impact of the trade war and Germany’s car industry being disrupted by new emissions rules have all weighed on the currency bloc’s economy in the second half of 2018.
The FTSE 100 slid 0.9pc as growth fears returned to markets. The index was led lower by HSBC and commodity stocks while US markets also slipped back in afternoon trade. The Dow Jones halved its losses after tumbling as much as 1pc.
FTSE 100 Trading Signals, Forecast and Prediction
At around 19:00 GMT, MPs will finally vote on Theresa May’s EU withdrawal deal – and barring any last-minute upsets, it looks likely she’ll be defeated. The prime minister gave it one final shot on Monday, pointing to new written assurances from the EU about the Northern Irish “backstop” – one of the key sticking points. But despite that, about 100 Conservative MPs and 10 DUP MPs could join Labour and the other opposition parties to vote the deal down.
Before they do that, though, MPs will also get a chance to reshape the deal by tabling amendments to it. Proposals include giving MPs a vote on whether to implement the backstop and ruling out the possibility of no deal. It’s up to Commons Speaker John Bercow which amendments get put to a vote and as you’ll probably remember, the last time he chose one it was somewhat controversial.
If the deal does fail, possible next steps are a “softer” Brexit, a vote of no confidence in the government, or even some permanent party splits.
What that means is that we may well be on for a choppy day and I know a lot of you are planning on giving today a miss. Lower stakes may well be worth doing today.
From a technical perspective I am looking at initial resistance at 6914 and 6920. We have a key fib here, and also the moving average resistance on the 2 hour chart. Slightly higher we have the 2 hour coral at 6937. The bulls will be keen to break above these levels as that opens up another test of the 7000 area, and we have 7002 and 7006 as resistance here. Above this then a break will likely lead to 7050, and possibly 7070.
The daily chart is still bullish with support moving up to 6932 now. Unfortunately we didn’t dip low enough to trigger that swing long yesterday at 6825, but any dip to this area today is worth a long. However, with the Brexit vote this evening it will be a choppy one.
If we follow the ASX200 and Asia in general then we should be on for a bullish day, and the US has moved up overnight as well after Trump hinted that a US/China trade deal is still possible. Just going to trail the stop on the rest of that S&P long.
Good luck today and lets see what this vote result brings!
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates