Quote from Nick on 27th February 2019, 10:40 am

27th February 2019

Yesterday saw us finally drop down to test the 25ema on the daily chart at 7093, whereupon the FTSE 100 put in an impressive bounce to climb to the 7170 resistance. It then dropped back from there for us to gain on the short and has remained around the 7140 area overnight. If the bulls can defend the 7090 level now then we may well be on for the next leg up, otherwise a drop towards 7065 is likely.

The pound surged to a 21-month high against the euro after Theresa May took a decisive step away from the no deal precipice by offering MPs the choice of a Brexit delay. Relief swept the City after the prime minister caved to threats of revolt from ministers, giving Parliament the opportunity in three crucial votes next month to rule out a disorderly exit from the EU on March 29.

However, ING economist James Smith warned that a shorter delay to Brexit could actually be “more damaging for the economy” by extending the imminent threat of no deal. Sterling enjoyed its strongest day against a basket of currencies since the Withdrawal Agreement was first struck by the Government and EU in November. The pound rallied as much as 1.3pc versus the euro at €1.1679 on hopes of no deal being avoided.

The currency pushed past the $1.32 mark against the dollar for only the second time this year, rallying to a four-month high. Sterling’s strength and trade talks buzz fading dragged the FTSE 100 lower. The index, which was also weighed down by a handful of heavy fallers, lagged on European markets, dipping 32.62 points to 7,151.12.

Powell in No Rush

Federal Reserve Chairman Jerome Powell said during a grilling by U.S. senators Tuesday that “crosscurrents and conflicting signals” pushed the central bank to take a more patient approach to raising interest rates in January. Powell again said the Federal Open Market Committee would continue to rely on data, adding “we’re in no rush to make a judgement about changes in policy.’’ On the global economy, the Fed chairman said financial conditions are now less supportive of growth than they were earlier last year, adding “growth has slowed in some major foreign economies, particularly China and Europe.” Powell’s remarks showed no bias toward further interest-rate increases or cuts. U.S. stocks wobbled during his comments, but were little changed by the time the bank chief ended his testimony.

US Stocks Fall Into the Close

Asian equities posted firm gains following a subdued lead from Wall Street, in the wake of a volatile session in the US. US Stocks ended lower as investors struggled to put an optimistic spin on Powell’s testimony. The pound rallied as U.K. Prime Minister Theresa May promised a vote to delay Brexit if her proposed deal fails. The S&P 500 swung between gains and losses in light volume, with increases capped at the round-number milestone of 2,800. West Texas crude finished higher after tumbling the most in four weeks on Monday following criticism from President Donald Trump that prices are too high. Treasuries advanced after a strong seven-year auction.

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FTSE 100 Trading Signals, Forecast and Prediction

Bit of a hard one to call today but looking at support initially at the 30min coral line and daily pivot at this 7130 level. If the bulls can defend that initially we may well see a rise towards the 7170/80 resistance area, and from here we may see further downside.

Support below the 7130 level is at yesterdays low area, and the 25ema on the daily still at 7090ish. Below this then that 7065 level is still looking pretty tempting and a level that should see a bounce if tested. Should being the operative word!

[caption id="attachment_14617" align="aligncenter" width="821"] FTSE 100 Trading Signals, Forecast and Prediction[/caption]

We have a 14 point dividend today so bear that in mind for later, and it may well help to underpin some strength again. The SP has dropped off that 2800 again overnight, and looks to still be heading for the 2741 level where we may see a bounce.

Today the bulls will be keen to build on that 7090 support level. If they are able to break above 7175 then we are still on course for a rise towards 7275 where we may well see a stutter. A break of this would be pretty key as it sets up quite a rise as we head towards the Brexit deadline day on 29th March.

If the bulls can hold the FTSE 100 up today then we may well see the 2 hour chart go bullish and support lock in at the 7140ish area, but its still bearish at the moment.

The pounds rise has stalled a bit and if that retraces some of yesterdays rise then that will help the FTSE100 to rise a bit today as well. Worth watching that and correlating them.

So, fairly simple plan really, watching 7130, 7090, 7065 for support, 7175 and 7275 for resistance.

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