Quote from Nick on 18th March 2019, 10:33 am

18th March 2019

Markets shrugged off worries over the global industrial slump spreading to the US last week amid building optimism over a trade deal between the Trump administration and Beijing.

Factory production in the United States unexpectedly dropped for a second straight month in February but European markets extended their rally to fresh five-month highs on trade talks speculation. Chinese state news agency Xinhua said that “substantive progress” was being made despite US Treasury Secretary Steven Mnuchin confirming earlier this week that a meeting to seal a trade deal had been delayed beyond March.

The FTSE 100 climbed 42.85 points to 7,228.28 with domestic stocks buoyed by MPs voting to extend Article 50. Following the vote, the pound regained some of its momentum at the end of its most volatile week in two years. The drama in Westminster pushed sterling 1.6pc higher versus a basket of currencies, its second-best weekly performance of the last 12 months.

European markets are suffering the longest withdrawal of money in a decade as investors desert the politically volatile and slowing region.
Money has poured out of Europe’s equity funds for 50 consecutive weeks, the longest run of outflows in 10 years, according to Morgan Stanley. The direction of investment has reversed in the last 12 months amid mounting political tensions in the UK and Italy. Although global stock prices have staged a recovery in 2019, investors have continued to pull money out of Europe amid stronger growth in the US.

Markets Open

Asian equity futures are all pointing higher after global shares had their best performance in almost four months last week, with the MSCI World Index climbing 2.8 percent. Almost all G-10 currencies rose against the dollar on Friday, led by the Swedish krona. Ten-year Treasury yields fell four basis points on soft economic data. Oil ended slightly down, snapping a four-day rally, and gold gained. As the week unfolds, a clutch of Asian central banks meet. Philippine, Indonesian, Thailand and Taiwan policy makers are all expected to stand pat, according to surveys. Fed officials and the Bank of England also decide on rates, with both expected to keep borrowing costs unchanged. Australian jobs on Thursday will be a focal point for how the economy is traveling.

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FTSE 100 Trading Signals, Forecast and Prediction

Asian stocks began the week mostly higher after last Friday’s tech-led upside on Wall St, while China outperformed today, and I expect that we may see a continuation of the bullishness this week. That said, we have initial resistance at 7285 to start with today and we may well see a dip from here back to Fridays closing price at 7228. Theresa May received backing by some staunch Brexiteers after she personally lobbied MPs but still remained significantly short of the number she needs to win a vote this week, and once again we will have Brexit weighing on the FTSE100 this week, and expect some volatility on cable once again.  This week also sees some central bank policy meetings, while the summit between US President Donald Trump and Chinese counterpart Xi Jinping could be delayed to June according to sources.

[caption id="attachment_14662" align="aligncenter" width="821"] FTSE 100 Trading Signals, Forecast and Prediction[/caption]

For today I am expecting an initial dip down to that 7230 support area, and then a bounce back to the 7285 level. Initially we also have a key fib resistance level at 7270, as well as the top of the 2 Raff channels fairly close at 7270 and 7289. The bulls might therefore have a bit of a challenge initially to break above 7285. However, if we do get a breakout to the upside there is still a distance possibility that we get a rise towards 7400 and higher early this week. As you know the daily chart that I am watching is still bullish, having tested that 7090 to 7040 support area. Still think that 7040 was a stop hunt though, as 7090 was the "technical" support and if so bodes well for much higher on the FTSE 100.

As I write we are just testing the double top area with the 15th Feb at 7262, hence why I think the bulls will need to get their skates on to break higher than this area initially today. They will be helped by a positive Asian session, so we may well see an attempt to break 7285.

On the support side, if the bears break the 7228 level then I am thinking a dip down towards 7190 where we have the 200ema on the 30min and the 2 hour coral line, with 7160 below this which is the 200ema on the daily. Generally though today I am expecting a bit of a bull Monday and the general bias to therefore be bullish and buying the dip still the best play for the moment. But conscious of the fact that we are near some strong resistance at 7260 to 7285.

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