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7290 still support with 7277 below that | 7340 and 7380 resistance | trade the FTSE 100 | live trading room

21st March 2019

The FTSE 100’s longest rally in almost two years was brought to an end by a plunge in iron ore prices and fears that US-China trade talks are stalling. Metals heavyweights Rio Tinto and BHP dragged the index lower after worries of an iron ore supply squeeze were eased by Brazilian giant Vale being given the green light to restart operations at its key Brucutu mine by a local court. Production at the site was halted after the fatal collapse of a dam at one of its Vale’s other mines in January.

Prices of the steel-making ingredient plunged almost 6pc on the decision to allow 8pc of Vale’s Brazilian output back online. Rio and BHP dropped 101p to £42.04 and 13.4p to £17.68, respectively, helping to stop the FTSE 100 from posting an eighth day of gains.

Stocks in London were put on the back foot by fears that trade talks are faltering as Beijing pushes back against US demands. A Bloomberg report revealed that China is starting to walk back on concessions ahead of next week’s high-level talks to seal a deal.The FTSE 100 closed 32.99 points lower at 7,291.01 as its domestic stocks and the pound dipped on the latest twist in the Brexit saga.

The pound's recovery suffered a setback after being sent sliding by Theresa May's request for a short Brexit delay. Sterling plunged on currency markets after the latest twist in the Brexit saga as Brussels signalled its opposition to the prime minister's plan to push the UK's departure from the EU back to June 30. It slid almost 1pc to below €1.16 and $1.32, respectively.

The longer the extension, the more positive it will be for the pound initially. The pound surged last week after MPs voted to take a no deal Brexit off the table but markets were put on edge by more uncertainty. London's domestic stocks were knocked by the latest developments in Westminster. The FTSE 100 was led lower by its heavily-exposed housebuilders, retailers and airlines, ending its longest winning run in almost two years.

Consumer prices rose by 1.9pc in the 12 months to February, up a touch from 1.8pc in January but still below the Bank of England’s 2pc target. The rising price of soft drinks and tobacco contributed to the higher rate of inflation, the Office for National Statistics said.

Fed Surprise

The U.S. Federal Reserve surprised markets by signaling it won’t raise rates this year, saying economic growth in the U.S. has slowed. Fed officials also said they would end the drawdown of central bank bond holdings in September. Together, the moves indicate how seriously policy makers take risks to their outlook, even as the domestic economy chugs along. Treasury yields tumbled to the lowest level in more than a year and rate cut bets for 2019 ratchet higher.  “Patient means that we see no need to rush to judgment,” Fed Chairman Jerome Powell said in a press conference. “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”

Trump Says Tariffs Will Stay

President Donald Trump said he’ll keep tariffs on China until he’s sure Beijing is complying with any trade deal. Beijing has pushed the Trump administration to remove tariffs, and expectations had been that both nations would agree to roll back duties as part of a trade war truce. “We’re not talking about removing them, we’re talking about leaving them for a substantial period of time, because we have to make sure that if we do the deal with China that China lives by the deal,” Trump told reporters at the White House Wednesday. “They’ve had a lot of problems living by certain deals.” The president’s comments dim hopes that round-the-clock trade negotiations between the world’s two biggest economies could lead to them removing the roughly $360 billion in tariffs they’ve imposed on each other’s imports.


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FTSE 100 Trading Signals, Forecast and Prediction

Overnight we have remained fairly positive, even after the US dropped sharply yesterday evening. I am thinking that we get a dip and rise today as the market digests the latest round of Brexit developments. Namely a delay to the leaving date. Cable will once again be driving the FTSE around.

[caption id="attachment_14673" align="aligncenter" width="821"]FTSE 100 Trading Signals, Forecast and Prediction FTSE 100 Trading Signals, Forecast and Prediction[/caption]

Resistance initially today is at the 7341 level, and then a key fib above this at 7363. Should the bulls break this then 7400 is the next likely target.

Yesterday we popped below the 7290 support to test a low at close at 7277 and this level is S1 and also the 200ema on the 30min so support initially this morning.The ASX200 (Australia) put in a dip and rise and I am thinking that if this level holds we will more than likely do the same. Should the bears really take control though and break below this level then we could drop 100 points to the 7170 level so bear that in mind.

The 2 hour chart remains bearish from yesterday but the bulls will be keen to keep the price above 7300, and ideally break 7350.

Good reaction yesterday off the S&P 2842 shorting level from the plan. That level remains as resistance for the time being.

So, fairly simple plan for today really, looking at the 7277, 7241 and 7170 areas as support. 7340 as resistance once again.

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