Good morning. It was a bit more bearish yesterday from the off than I was expecting and though the long at 6736 had a little bounce it was short lived and the stop got hit. Sorry about that. it dropped during the day (twice) as far as that bottom support level at 6715 mentioned yesterday (a little bit further on the second dip) but then that has held so far. Its still all eye on the payroll news tomorrow in the US to give a better clue as to the direction over the next few weeks. That 6712 area is the line in the sand and I think weakness below that will see 6682 and possibly lower. 
If it holds then a move above 6732 could lead to 6767 again. That said, it does look rather weak and the www.chebscan.com channel is saying a sell at this level as you can see below. Asia was a bit weak overnight, but FTSE futures prices have held up pretty well, hovering around the 6725 area. Either way, be cautiously long if 6712 holds but expect a break lower. Down to 6680 possibly even 6630.
Asia Overnight from Bloomberg
Asian stocks fell as China’s factory-gate prices extended the longest streak of declines since the Asian financial crisis and Federal Reserve minutes showed officials saw diminishing benefits from bond buying.
The MSCI Asia Pacific Index lost 0.6 percent to 139.03 as of 1:10 p.m. in Tokyo, with about three stocks falling for every two that rose. The measure gained 1 percent yesterday, the biggest advance since Nov. 18. The index maintained losses as data showed China’s inflation rate slowed last month by more than economists forecast and an index of producer prices recorded its 22nd straight drop from a year earlier.
China’s “producer prices have been a huge concern,” Jackson Wong, vice president of Tanrich Securities in Hong Kong, said by telephone. “At industrial levels, no one is making money in a negative environment.”
China’s consumer-price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said in Beijing. That compares with a 2.7 percent median estimate of analysts surveyed by Bloomberg News and a 3 percent increase in November. The producer-price index fell 1.4 percent from a year earlier to record its longest series of losses since the Asian financial crisis in 1997.
USA
Futures on the Standard & Poor’s 500 Index were little changed today. The equity gauge closed little changed yesterday. Fed officials saw diminishing economic benefits from their bond-buying program and voiced concern about future risks to financial stability during their last meeting, when they began to cut the pace of purchases.
Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of bond buying as the economy strengthens. The minutes didn’t describe a set schedule for reductions, although “a few” officials mentioned the need for a “more deterministic path.”
Companies in the U.S. boosted payrolls by 238,000 in December, figures from ADP Research Institute in Roseland, New Jersey, showed yesterday. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.
The Labor Department will announce tomorrow figures for new hiring and the unemployment rate for last month.
FTSE Outlook
Oh FTSE bulls, don’t give up just yet, we want the weekly chart to play out with the rise to 6850! Crucial level today is 6712 (yesterday’s low) which as long as that holds then could get the top of the 10 day Raff at 6777. Unfortunately if it doesn’t hold then 6670 and 6627 look possible supports next. Assuming it does hold then 6730ish (pivot area and channel top on 30 minute) will need to break to target 6760 and 6777. The EMAs are bearish for the start as I write this, and we are within a fairly tight declining 30 minute channel. I have put a fairly zig-zaggy arrow scenario below, basically based on the 6712 area holding. I think it will, as I think NFP will be ok tomorrow, there will be a test of the top of the 10 day channel top. The 10 day Bianca channel top has dropped down to 6787 now as well so its definitely turning bearish and that weekly scenario below might play out a bit earlier, failing to reach the 6850/950 top of the weekly channel. I am still thinking a decline to 6000 during the first half of 2014.