Last day before Christmas | Asia falls | FTSE resistance 7085 | Support 7035

FTSE 100 Support 7052 7047 7045 7032 7027 6976 6932
FTSE 100 Resistance 7071 7085 7116 7158 7169

Good morning. That was a pretty slow moving day yesterday with the FTSE rising slowly helped only by a falling pound and rising oil. I expect we will see that 11200 level again on cable that we hit the day of the Brexit result. The ASX200 dropped and bounced a bit during their session, so we may well do the same to close out the pre Christmas period. The bulls are still pretty keen to keep it above 7000, with 7085 looking like resistance for today. So, for the last trading day before the Christmas break I am expecting a low volume dip and rise today.

US & Asia Overnight from Bloomberg

Asian shares fell on the last trading day before Christmas as Chinese equities extended their losses amid concerns over rising borrowing costs in the world’s two biggest economies. The greenback halted its rally and oil slid.

The MSCI Asia-Pacific Index excluding Japan dropped for an eighth session, its longest series of losses since May, as Hong Kong stocks opened lower and the yuan weakened. Markets in Tokyo were closed for a holiday. The Bloomberg Dollar Spot Index stalled after rising 0.3 percent Thursday and government bonds mostly gained. The Dow Jones Industrial Average retreated for a second day after failing to breach 20,000.

The lack of confidence in Asian equities is a sharp contrast from the previous quarter, when traders were betting Britain’s vote to leave the European Union would spur more global central bank easing. Instead, the U.S. Federal Reserve raised borrowing costs this month, while China has tightened monetary conditions. Data on U.S. durable goods orders showing increased business activity may reinforce bets on economic strength that sent the dollar to near a 14-year high against the euro.

Stocks

The MSCI Asia Index excluding Japan slid 0.5 percent as of 12:34 p.m. in Singapore, with Australia’s S&P/ASX 200 Index down 0.3 percent and Singapore’s Straits Times Index losing 0.4 percent.
Hong Kong’s Hang Seng Index lost 0.5 percent, while China’s CSI 300 Index fell 0.6 percent.
A gauge of Chinese property stocks fell for a 10th day, poised for its longest losing streak since August 2015
The S&P 500 Index declined for a second day on Thursday, losing 0.2 percent, and the Dow fell 0.1 percent.
Billionaire investor Carl Icahn said he was concerned about the U.S. stock market “in the short term” given its run-up following Trump’s win, adding that he has increased his hedging.
Orders for U.S. business equipment advanced more than forecast last month, while the final reading of third-quarter gross domestic product topped estimates.

Bonds

Treasury futures were weaker after U.S. bonds fell Thursday, taking 10-year yields up by two basis points to 2.55 percent.
Australian bonds slid, pushing the 10-year yield four basis points higher to 2.87 percent, while the rate on similar-dated kiwi notes climbed three basis points to 3.47 percent.
U.S. mortgage rates rose, with the 30-year reaching the highest level since April 2014, after the Fed increase.

Currencies

The Korean won led declines in Asian emerging currencies, losing 0.3 percent, while the yuan slid 0.1 percent with the ringgit and the rupiah. The Bloomberg Dollar Spot index was little changed as the euro, yen and pound were little changed against the greenback.
“Going into next year, we are confident the dollar will continue to make headway,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “It will be the currency that appreciates in 2017, it’s just a question of how much.”

Commodities

West Texas Intermediate crude oil declined 0.5 percent to $52.68 a barrel.
Gold traded near the lowest level in 10 months as exchange-traded funds holding the metal saw a 29th day of contraction.
Copper retreated 0.3 percent on the London Metal Exchange, while zinc lost 0.5 percent.
[Bloomberg]

FTSE 100 Outlook and Prediction

So here we are, not quite the last trading day of the year, but the last one before the Christmas break. Will the bulls manage to keep it above 7000? I think they will and I thinking that a dip down to the bottom of the 10 day Bianca channel at 7032 is a good spot to try a long for a brief rally to 7085 today. The bulls managed to break the 7057 resistance level yesterday (it was 50/50 if they were going to be able to as you know from yesterdays email), but didn’t really manage to hold above it, dropping back to just below from the 7065 level. If they manage another push up today then 7085 might well see a similar reaction with a dip back.

We also have the daily pivot for support at 7045, just below where we are looking at opening. With that flat to slightly bullish day yesterday the 2 hour chart has once again changed to bull, showing support at 7052, pretty much where we are as I am writing. Overnight has remained fairly static at the 7055 level. Lower support is at the 200ema on the 30min at 7027.

On the bigger picture outlook, the daily chart still has good support at 6932 – a level that will be worth a swing long from I am thinking. That might well garner a rise to 7200 before the downside kicks in during Q1 next year. The coral on the daily chart has just gone green showing a bullish trend (quite late for this colour change as we have had a rise since the election result) so its probably a weak one.