13th August 2019
The pound dropped to a 10-year low against the euro early yesterday morning, as traders in Asia absorbed a report that said MPs may be unable to prevent a no-deal Brexit outcome. Sterling reached an intraday low of €1.0724 just after midnight, according to Bloomberg data. The drop landed beneath its previous post-Brexit vote nadir, in August 2017, to hit a 10-year low.
Fortunes reversed later in the day, with the pound mounting a strong comeback against the common currency as UK trading began. Sterling was up against the euro late on Monday morning.
Britain’s Brexit paralysis has dragged on markets in recent months. The pound has repeatedly found fresh 31-month lows over the past fortnight, as ramped up no-deal rhetoric, global market worries and shock data on Friday that showed the UK economy contracted in the second quarter all added to the pressure.
Cables rise saw the FTSE 100 drop from the 7305 level again to test the 2 hour support at 7215 before a bit of a bounce. However, the weakness now makes things look decidedly risk off and we may well stay within the 7100 to 7300 range for a large part of August.
UK PM Johnson believes EU will cave in at the last minute to save Ireland from a no-deal Brexit, according to reports citing a Downing Street source.
Todays news highlights include German CPI & ZEW, UK Employment, US CPI, UK 2049 Gilt Auction
We have a 30 point dividend again this week. In a positive sign for the bulls the 7200/7215 support area has had since the bell, and indeed we have seen a bit of a bounce from that area. Below this level then I am still looking at 7185 and 7155 as the main supports, with the latter expected to hold, at least initially.
Asian stocks followed their U.S. counterparts lower as political unrest in Hong Kong and Argentina added to trade concerns and fueled a rally in global bonds. The yen and gold climbed. Risk assets were pummeled and Treasury yields sank after authorities closed Hong Kong’s airport and a Chinese official said the city was at a “critical juncture.” Futures indicated markets will open lower in Tokyo when traders return from a holiday Monday, as well as in Sydney. The latest sell-off provided another reminder of the fragile mood across markets extending the rocky start to August.
FTSE 100 Trading Signals, Forecast and Prediction
The bulls failed to break above the 7305 level yesterday and it actually turned into quite a weak session. It looks like the 7300 to 7100 range is in play for the moment (we may well bounce around in this range for the rest of August) though the bulls will be keen to push up higher than this. The 25ema on the daily is showing resistance now at 7389 and should we get a rally up to this area then a short here still looks worth a go. The 200ema is slightly lower at 7313 so relevant to that range playing out. Despite that larger range in play, the 7200 support level has held overnight and still keeps the bulls in the game. We have a large 30 point dividend this week which will help to support things today and tomorrow as well.
Should the bears break below 7200 then then 7185 level is still support on the daily and also we have a key fib here for today. Below this then 7155 is showing as a bounce area as well and may well be the short term low for the next few sessions, if we see that.
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates