The fairly large, out of hours spike overnight on the news that Saudi will cut oil production, was probably the final nail in the coffin for the shorters that have been mercilessly squeezed over the past week. Having sent the FTSE 100 spike up to 7020 (funnily enough bang on the 10 day Bianca channel) and drop back to 6974, where it closed Friday, it was probably mostly the algorithms that had fun. Blow off top anyone? Could drop back now, ready to spring up again closer to Christmas for the Santa Rally.
We have had a large move up overnight that has since retraced, from exactly the top of the 10 day Bianca channel at 6721. I think we may well try to push up again initially, but can see a dip down towards 6850 on the cards before the "Santa Rally" proper begins. The rises over the past week will have stopped out most of the shorters now, most people will be thinking now is the time to go long, so the market will probably turn to squeeze them at some point soon.
For today, we have resistance at 6980, 7020, 7070 with support at 6960, 6942 and then S3 and the 200ema on 30minute chart at 6890. Bigger picture support is 6850. As mentioned, I think any test of this is likely to hold to start off the Santa Rally, which could take us all the way back to the 7130 level and beyond. Brexit and Trump jitters? What were they?
