Rise and dip with 6780 resistance today | Brexit vote | Market Jitters | 6670 support | Trading analysis

Rise and dip with 6780 resistance today | Brexit vote | Market Jitters | 6670 support | Trading analysis

10th December 2018

That was some nice reactions off the technical levels on Friday, despite the turbulent backdrop and the rumoured demise of the Brexit deal, Theresa May, the UK, pretty much everything…! Sentiment still remains fragile, as traders gauge whether the Fed will soon pause hiking as trade war fears linger.

Friday saw the market rebound in the wake of Thursday’s shock sell-off, as investors shrugged off escalating tensions between China and the US to end the week on a high. The FTSE 100 led the way among European indices, clawing back a 1.1pc gain to close at 6778.1 points after losing 3.15pc on Thursday, its worst day since the aftermath of the Brexit referendum in 2016.

However, despite a bright start, US markets quickly gave up early gains, with both the Dow Jones Industrial Average and the S&P 500 slipping more than 2pc. Meanwhile, oil jumped in afternoon trade after major producing nations agreed to cut 1.2m barrels of oil from global supply in an attempt to rein in sliding prices. Brent crude climbed more than 5pc to just over $63 a barrel.

Asian equity futures were down on Monday morning after the worst week since March for the S&P 500 Index. U.S. payrolls and wages rose by less than forecast in November. Investors are growing wary of a trade truce: Robert Lighthizer, the U.S. trade representative, played down the possibility of extending the tariff truce agreed in Buenos Aires beyond March 1. The yuan weakened. Treasuries fluctuated before settling higher as risk aversion increased. The dollar fell. Oil rose after OPEC agreed to cut output.

Coming Up
The U.K. House of Commons votes on the EU divorce deal on Tuesday, with Prime Minister Theresa May confronted by opponents within her own Conservative Party. The European Central Bank sets monetary policy on Thursday. Japan GDP and current account are out on Monday. China money supply is due this week. U.S. CPI is scheduled for Wednesday. China industrial production and retail sales data will be released Friday.



FTSE 100 Trading Signals, Forecast and Prediction

We will be on for a pretty interesting week! Parliament votes on the Brexit deal, the Fed might postpone the December rate hike, the markets are jittery, the FTSE has broken below 7000, there is no sign of a “Santa Rally” at the moment and the general sentiment is pretty negative. Over the weekend some quarters were even putting “depression” out in the wild, never mind “recession”. We are at 11/100 on the fear/greed indicator. So don’t be surprised if we rally out of nowhere!

For today I am looking at initial resistance at the 6770 to 6790 area where we have the 30min coral and also the daily pivot. If the bears defend this area then I fully expect us to test the low from last week at 6670 at some point this week, maybe today. If that holds then we might end the day stronger than we started it with a bit of Bull Monday kicking in. However, the Asian session was pretty weak, and the ASX200 declined for most of Monday. If the bulls were able to break above the 6790 level then 6840 is next up with the 2hr coral, with 6885 above that. If things stabilise politically this week then the FTSE may well break this level, 6670 will be the low and we will probably be heading for 6950, and possibly 7100. Ho Ho Ho………

On the flip side, if 6670 breaks then there S3 level today at 6572 looks a likely target area for the bears and a level that may see a bounce. I am not sure we will get that low today though, so looking at any dip down to 6670 as a support that will likely hold.

All in all its a bit 50/50 ahead of this vote, so still being slightly cautious for the moment but expecting some upside as long as 6670 holds for the moment. If we break 6500 then it’s a lot bleaker!

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