Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Though Trend Remains Up, Trade FTSE 100 Cautiously This Week

Published 13/03/2017, 11:06
Updated 17/03/2024, 07:38

Last week the FTSE 100 index declined to a level where the lower line of a potential rising wedge is parallel to the upper line. In a rising wedge the lines should be converging. Therefore the index is in a rising trend channel, the trend is still up.

Today the index is strong given the strength in GBP/USD. For weeks the index has been negatively correlated with GBP/USD, but not today. Something is changing.

One scenario is shown on the chart below. Perhaps Friday’s rally was the second wave inside wave c (circle). In this case the rally will end near 7394.6. As you can see, the pattern is not clear. Indeed, there are other ways to interpret the rally.

This week attention will be on the pound as article 50 could be triggered. No date has been announced but it could be this week or next. In theory the triggering of article 50 could be a significant market moving event, however, I think this will have a modest impact on the pound because people expect this event to happen and they have already priced in the consequences of leaving the EU.

Markets are higher this morning after strong US jobs data on Friday, the strong labour market will give the green light to Fed officials to raise interest rates on Wednesday. The Fed has hinted for a while they could raise rates as early as this week. We also have an election in the Netherlands on Wednesday, worries about the future of the EU could hit the markets if the far-right and populist candidate Geert Wilders gains more ground than expected.

Another piece of news this week is President Trump's budget proposal on Thursday. Will this move the market or is it already priced in? What is clear is that traders will need to be cautious this week, the potential for a sharp move up or down is real.

FTSE 100

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.