29th November 2018
Markets had a mixed day of trading, amid investor concerns about Brexit uncertainty and US-China trade relations. Chancellor Philip Hammond said that Britain would be worse off for leaving the EU “purely from an economic point of view”, but backed Theresa May’s deal, which “minimises” these costs. The 6990 level held once again, and the futures dropped off the 7070 level in the evening, just below the 7080 resistance from Monday. The bulls will be relieved that the price is back above 7000, however, futures are dropping off overnight and we are only at 7035 as I write this.
In the eurozone, the German DAX 30 index dipped 10.23 points, or 0.09pc, ending at 11,298.88 while the French CAC 40 was flat, up 0.09 points to 4,983.24.
The FTSE 100 index closed 12.33 points, or 0.18pc, lower at 7,004.52 in London, while the second tier FTSE 250 ended 16.39 points down, or 0.11pc, at 18,639.73.
Federal Reserve Chairman Jerome Powell said interest rates are “just below” the so-called neutral range, softening previous comments that seemed to suggest a greater distance and spurring speculation that central bankers are increasingly open to pausing their series of hikes next year. Powell’s description tempered remarks last month that markets read as a signal of more aggressive monetary policy tightening. In his speech Wednesday, Powell said the Fed’s benchmark interest rate was “just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth.” The spread between December 2018 and December 2019 eurodollar futures — a measure of how much tightening traders expect next year — briefly touched less than 25 basis points, the equivalent of one Fed hike. That’s the lowest level in six months and less than half the gap from mid-October.
Mark Carney said the Bank of England is prepared for the worst possible Brexit and that the U.K. faces the steepest economic slump since at least World War II if it crashes out of the EU without a deal. The stark warningfrom the governor sees the economy shrinking by 8 percent within a year and property prices plunging almost a third under a worst-case scenario, with Prime Minister Theresa May failing to get her Brexit plan past lawmakers. For context, the peak-to-trough drop in U.K. GDP in the financial crisis was just over 6 percent. A Bloomberg survey of 17 strategists and fund managers sees a 55 percent chance that British lawmakers will reject the accord. That may sound low, considering the widespread political backlash it received, which cast doubt over her ability to get it through the House of Commons.
Global economic growth may be slowing more than forecast only a month ago, underscoring the urgency for countries to pull back from a damaging trade war, the International Monetary Fund warned. The IMF downgraded its forecast for world growth last month, and recent data suggest the outlook has gotten worse since then, the fund said Wednesday in report. Financial conditions have tightened, especially in emerging markets, while trade tensions have increased, said the Washington-based fund. Since the IMF’s latest World Economic Update on Oct. 9, global stocks have slumped on concerns that rising interest rates and the U.S.-China trade war could undermine growth.
FTSE 100 Trading Signals, Forecast and Prediction
For today I am thinking that we might get an initial dip down towards the closing price yesterdays at 7004, and we also have S1 at 7007. Just below this we have the key fib at 6996 so there are a few decent supports in this area, coupled with the fact that the bulls will be keen once again to keep the price above 7000. 6990 held as support yesterday afternoon once again, with a decent rise towards 7070.
Initial resistance is on the 30min chart at 7045, plus a bit of daily resistance here so we may well see a dip from this level to start with. Above this then we are still looking at 7090.
If the bulls can break that 7090 level then we are looking at the top of the 10 day Raff channel at 7125, but also more likely a rise towards the 7200 level.
I favoured buying the dips yesterday (was a bit early at 7032 though) and I think that is the case again today. Around the 7000 level, and the stops just below the recent low. If the bears however were to break below 6970 then I am thinking that we will see 6900 so it is worth flipping to a short on a break of 6975. Below 6900 then 6860 is the next support of note. Don’t think I will get that low today but you never know!
Range is still 6980 to 7080 for the moment so still watching for one of those levels to break really. If the bulls can close above the 7053 level today then we should start to see bit of bullish momentum creep in.
Dip and rise today for another V shaped day is what I am thinking.
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