23rd January 2019
Sterling was buoyed by good news for the economy yesterday, as the Office for National Statistics announced that unemployment is at the joint-lowest level since the 1970s, as the “jobs miracle” continues despite Brexit uncertainty. From daily lows of $1.2857 it rose to highs of $1.2970, gaining over a cent against the dollar in total.
Figures for government borrowing were not as positive, showing a slight increase in the deficit in December, although still much lower than average levels seen since 2008.
The FTSE 100 did not show as much optimism, closing down 69.2 points at 6,901.39, almost 1pc lower than yesterday’s closing price. It was dragged lower for a second day after the IMF in Davos warned of a range of “triggers” that could derail global growth. It cut its growth forecasts to 3.5pc in 2019 and 2.6pc in 2020, down 0.2 and 0.1 percentage point, respectively.
Markets in the US headed down for the first time in a week, led by drops in industrial and energy companies, which are affected by the gloomy economic outlook. After being closed for a public holiday Monday, the Dow Jones, S&P and Nasdaq all declined by over 1pc.
Asian shares opened lower after U.S. equities dropped the most in almost three weeks, as rising pessimism that trade tensions with China will persist helped send technology and multinational companies tumbling. Treasuries climbed, oil fell and the yen strengthened. Caterpillar and DowDuPont led declines in the Dow Jones Industrial Average of more than 400 points at one point. The S&P 500 briefly pared losses after presidential adviser Lawrence Kudlow said a Financial Times report that the U.S. canceled a preliminary meeting with Chinese officials was untrue.
The 6925 level held well initially but the bulls failed to break above the 6960 area. The overnight low at 6850 has held so far though, and 6948 is still looking like the key area that the bulls need to break for any rise towards 7000+.
FTSE 100 Trading Signals, Forecast and Prediction
Overnight the 25ema on the daily chart has held again at 6850 and we even saw a 50 point bounce. However, things do look bearish, with the 6950 still resistance on the 2 hour chart. A rise to here today would be worth a short at this level as it does look like we might see the 6750 level again soon. The 2 hour charts across the board look bearish on most markets so having dropped off 7000 then we may well be on for further downside. The US certainly sold off pretty hard yesterday with the S&P setting a low at 2620 but still has daily support at 2580.
For today on the FTSE the bulls will be keen to build on the 6850 support holding for a push towards the 200ema on the 30min chart at 6912. We do have the daily pivot at 6897 slightly lower though so we may see a stutter in this range. If the bulls were able to break above that then R1 and the key fib, along with the 2hr resistance is at 6940/50 so a short here makes sense. If we remain subdued/bearish today then the 2 hour coral is likely to turn red and that is showing resistance at 6937 as well. So, a fair few resistance levels of note in this area.
If the bears were to break below 6850 then the fib is at a fairly close 6841, but lower down support is at 6812 for S1. Should the bears break 6798 then we are looking at a drop down towards 6720. One of my longer term charts is also showing a possible drop to 6535 over the next few weeks so something to bear in mind. It is also showing 2346 on the S&P….. Might be on for a red February if they come to pass (early days and by no means confirmed as likely to happen at the moment).
Tentatively bullish this morning for a rise towards 6912 to start with though after that it will be a battle between bears and bulls for what happens next – build on support for 6950, or drop it down to 6850 and lower….. 6950 is still key resistance.
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