11th February 2019
A six-week surge in global stocks came to an end as growth and trade war worries reared their head again on markets at the end of last week. Donald Trump threatened to derail this year’s recovery on markets after ruling out a meeting with Chinese president Xi Jinping before tariffs are automatically hiked on Chinese goods next month.
The US president said it is “highly unlikely” he will meet with his counterpart before tariffs on $200bn of Chinese imports are lifted to 25pc on March 2, stoking fears that a deal on trade will not be reached before the deadline.
Trade angst added to market nerves stoked by cuts to growth forecasts by the Bank of England, Reserve Bank of Australia and the European Commission in recent days.
Global stocks had soared 8pc in a bumper start to 2019, supported by central bank bowing to pressure to row back on plans to normalise policy. The MSCI World Index suffered a 0.9pc loss in the first setback for investors this year.
Asian equity markets began the week mixed following the similar performance of their US peers on Friday and ahead of US-China trade talks. Todays main news is UK GDP at 09:30, forecasted at 1.4% versus 1.5% previously.
FTSE 100 Trading Signals, Forecast and Prediction
The bulls have fought back a bit after the dip on Friday to the 7063 level (shame it didn’t get as low as the long order at 7050 though) and we are back above 7100 to start the week. The 2 hour chart remains bearish though with resistance at the 7155 and 7168 levels to start with today, so if we do get a rise to this area then we may see a stutter from the bulls. I have gone for a short here for today, with a stop just above the coral line, but also above the 7172 daily level – in theory if the bulls break 7152 we should manage 7172 but let’s see. Above that then 7186 looks possible, where we have R3. On the daily chart 7235 is still resistance with longer term resistance at 7313.
If we follow the Australian market for today then we may well get a dip and rise scenario playing out, and for support today I am looking at the 7080 area initially. We have S1 and also the 30min coral in this area, though a break of this will likely see a drop down towards the 7050 area we had as support on Friday. This tallies with S2 at 7045. Might be worth trying a long at this level too, should the earlier one get stopped out. We may well see a Bull Monday again.
The daily chart remains bullish with moving average support at 6967 for the moment, and I think if we were to get a dip down from here, having failed to break the 7200 level at the start of Feb, it might well be a decent area for some swing longs to enter to target a rise through 7200 on the next go.
The bulls remain in control for the moment, though with UK GDP later, Brexit and US/China trade negotiations, it is likely to remain choppy.
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