Quote from Nick on 29th March 2019, 10:36 am

29th March 2019

The FTSE 100 climbed to the 7265 resistance level nicely yesterday, and then dropped back, failing to reach the 7300 round number level. The bulls remain in charge for the moment though, with that 7200 level holding as support.

The rally in global stocks was dampened by Donald Trump's chief economic adviser Larry Kudlow's update on US-China trade talks. Stocks gave up their gains after Mr Kudlow revealed that the US could lift some tariffs on Chinese goods while leaving others in place as high-level trade talks resume in Beijing. He added that talks could drag on for weeks or months longer.

The pound tumbled more than 1pc against the dollar and euro after MPs failed to find a consensus on the future direction of Brexit and Theresa May's deal looked destined for another defeat. After nearing a 22-month high versus the euro before yesterday's indicative votes, sterling slipped sharply as the Government revealed that MPs will only vote on the withdrawal agreement and not the political declaration tomorrow. Sterling's momentum was knocked overnight by the DUP revealing that it will not back the prime minister's deal. Mounting worries on currency markets over the political deadlock sent sterling sliding as much as 1.4pc versus the dollar to $1.3034, a one-week low. The pound shed 1.1pc against the euro, trading as low as €1.1619, as business groups urged MPs to make a breakthrough.

Trade Talks May Be Extended

The Trump administration is prepared to keep negotiating with China for weeks or even months to reach a trade deal that will ensure the world’s second-largest economy improves market access and intellectual-property policies for U.S. companies, White House economic adviser Larry Kudlow said in a speech in Washington on Thursday. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with Chinese negotiators in Beijing for a working dinner on Thursday and they’ll participate in a full day of talks on Friday. The discussions will continue next week when China’s trade czar, Vice Premier Liu He, will travel to Washington to meet with U.S. negotiators as well as President Donald Trump, according to Kudlow.

U.S. Growth Cools

U.S. economic growth cooled by more than initially reported in the last quarter of 2018, signaling mounting challenges to expansion. Gross domestic product grew at a 2.2 percent annualized rate, Commerce Department data showed Thursday, less than the initial 2.6 percent reading and projections for a revision of 2.3 percent. Consumer spending, the biggest part of the economy, grew at a downwardly revised 2.5 percent pace that also missed projections. The current stretch of growth is poised to become the nation’s longest on record at midyear, but the downward revision indicates that the economy had weaker momentum heading into 2019, when various indicators in housing and manufacturing have been showing signs of cooling.

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FTSE 100 Trading Signals, Forecast and Prediction

For today I think we will build a bit more on yesterdays bullishness and head towards the resistance at 7300. We have key fib and also the round number here so may well see a bit of a dip off that, though a break above 7300 and we are likely to rise towards the 7315 level. I have therefore put a slightly wider stop on my short above this level, so you could do smaller stakes if you wish. Above that I am looking at the 7366 level where we have the top of the 10 day Raff channel, though I am not totally convinced that we will get that high today ahead of the weekend and tonights vote. However, the charts bode well for further bullishness next week. My long term forecasting model is also still showing a possible test of the 7500 level.

[caption id="attachment_14692" align="aligncenter" width="821"] FTSE 100 Trading Signals, Forecast and Prediction[/caption]

Support this morning is initially at the 7260 area where we have the green coral line. 7265 was also resistance yesterday and should the bulls pop just above this then it is likely to turn to support.  Below this the daily pivot is 7245 and I am thinking that we may see that hold initially, but there is support from the 200ema on the 30min chart at the 7230 area below this. Should the bears take charge today though, then a drop down to 7193/7199 looks viable and also an area that favours a decent long. We have the fib at 7201, but also the 2 hour coral has finally gone green and shows support at 7193. Ergo this area looks with a go for longs. Good luck today.

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