6th March 2019
The services sector enjoyed an unexpected rebound away from a post-Brexit vote low in February despite mounting uncertainty “acting as a brake” on the largest part of the UK economy. Growth accelerated to a four-month high in IHS Markit’s closely-watched PMI survey but remained close to stagnation. Employment in the sector dropped at its fastest pace for more than seven years while business optimism for the year ahead sank to its lowest level since the EU referendum.
Although growth saw a “modest” rebound in February, the PMI surveys tracking the services, manufacturing and construction sectors still suggest that the UK economy is on course to expand at just 0.1pc in the first quarter.
The ailing eurozone economy also saw a pick-up in growth last month. The eurozone composite PMI index bounced back from its lowest level in more than five years, edging up to a four-month high.
We have another large dividend today of 18.4 points so likely to see some support for the bulls today from that. We failed to get much of a dip yesterday with the FTSE 100 only dropping to 7125 before rallying to the 7180 resistance area. The bulls tried to push higher but couldn’t break 7192 in the end.
FTSE 100 Trading Signals, Forecast and Prediction
For today I am thinking that we repeat the pattern that we have seen during each session this week, namely a dip and rise. The dips however have been very shallow, with the bears unable to drop it down to the main support areas so far this week. For today there is decent support at the 7140 area and if we dip to here then it should hold for another attempt to properly break 7180 and push higher.
Yesterday we got the slow rise to our shorting level, however the reaction was pretty muted – a 20 point drop and that was it really. With the divi today I expect a bullish overtone to today as well. I have put a small short in the trade plan at 7200 from R1 and just below the key fib level, however, in theory if the bulls are properly able to break 7192 then we should be on for a rise towards 7290 over the next few sessions. Hence just doing smaller stakes on that short. We have US jobs data on Friday which may give more of a clue as expectations are for it to have moderated. ECB and Draghi today from the ECB with them expected to leave rates unchanged amid a deteriorating outlook.
Below the 7140 support area then the 2 hour coral is green and at 7117, remaining untested since changing to a bull trend. It may well act as support and I have put a long on the plan here as well. If it holds then we should rise back to 7192 or higher. However, a break of this level will likely see a drop down to 6967 support area instead and my expectation for a rise towards 7290 is dashed in the short term – though that lower support level should hold for a stronger end to Q1. That said, I am still favouring a rise before any major dip at the moment.
So, fairly simple plan really, looking at 7140 support and 7200 resistance, with the bigger range at 7115 and 7290. It’s all up to the bulls really once again and if they can push on. Good luck today!
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