Quote from Nick on 23rd November 2018, 10:18 am

23rd November 2018

That was more bearish than I expected yesterday after Wednesday's strength and positive Brexit results. The bears managed to break 7000 to test a low at 6940 before a small rally from there. With the US closed the volume was light and the FTSE 100 drifted after that.

The U.K. and the European Union have agreed to the final piece of their Brexit deal, setting out a vision for close economic ties in a draft that hands British Prime Minister Theresa May some key political wins. EU Council President Donald Tusk said the draft declaration on future ties had been agreed in principle, pending leaders’ sign-off on Sunday.  May faces one more hurdle: She now  needs to convince a skeptical Parliament to back it in a vote that will probably take place next month.

Sentiment in the city was bolstered by the draft declaration outlining plans for a free-trade deal while giving Theresa May key concessions, such as allowing the UK to make independent trade policy, to help her sell the deal to MPs. The latest twist in the Brexit saga lifted sterling against its rivals, but the currency’s rally put only a small dent in its no-deal losses. The pound jumped as much as 0.8pc against the euro to €1.1310 but its gains were capped by continued scepticism over the Prime Minister’s ability to force the Withdrawal Agreement through Parliament next month.

Asian markets are down after U.S. equity futures dropped alongside European stocks on Thursday in a subdued day of trading thanks to the American Thanksgiving holiday. Volumes are likely to remain thin on Friday in Asia. The pound jumped and the euro strengthened after the U.K. and EU’s breakthrough over the Brexit deal. Oil was back below $54 a barrel. Treasuries didn’t trade because of the holiday, and they won’t trade in Asia, as Japan is shut to celebrate its own version of Thanksgiving.

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FTSE 100 Trading Signals, Forecast and Prediction

For today if the 6940 area (yesterday low) and fib level at 6936 holds then we may well see a push up back towards the 7015 level. If the bulls were able to break above this then the fib at 7035 looks achievable, and with R1 at 7042 we may see a stutter here. The bulls defended the low yesterday and may well try again today.

A break of 6940 however sees the next support at 6920, though its weak and 6895 might well see a better reaction. Might be worth a long off this level to catch a recovery back towards 7000. We also have S2 at 6880 so the stop can be just below that. If it goes really pear shaped then a test of the 6860 level looks possible.

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