The pound tumbled further from the 13500 level during yesterday's session as Boris Johnson announced plans to enshrine the Brexit deadline in law. The news increased concern about the possibility of a no-deal Brexit, sending the domestically-focused FTSE 250 tumbling more than 1pc.
The FTSE 100 managed to close in positive territory in the end, cushioned by a falling pound. It edged up 0.08pc to 7,525.28 while the domestically-focused FTSE 250 tumbled 1.05pc to 21,690.20. In the eurozone both the Paris CAC 40 and Frankfurt DAX ended in the red, falling 0.39pc and 0.89pc respectively.
FTSE 100 Outlook and Prediction
It looks like we might see a bit more bearishness today, as the FTSE has failed to break the 7540 level. The bears need to break the 7495 level though really as 7500 was support yesterday for a couple of tests and also we have S1 at 7495 today. If they were to break below this then we should see a drop down towards the 7471 level for a test of S2, and also the 2 hour coral line. This is rising steadily, and at the time of writing is at 7459 but may well coincide with 7470 later on this morning. I am still thinking that a dip down to test the daily 25ema support level, currently at 7338 is possible before a rally back up again to close out the year (as it's rising then 7400 maybe). We shall see.
If the bulls were to break above the 7553 level (this is now the 2 hour resistance level) after crossing to bear following the fairly flat session yesterday, then we will likely see a rise towards the 7650 or higher level to test the top of the 10 day Raff channel. That said, I think we will see a bit of a dip today as the focus is now back on Brexit and Trade and those that are long will be keen to bank some profit after the "Boris bounce".
I would also quite like to see the S&P dip down to test the 3173 gap level from Friday, and the bulls failed to test the 3200 level so far this week. However, it is sitting on the 2 hour coral support as I write at 3188 so we may see this holding initially.
Not much more to say really, watching the 7495/7500 level for support with 7471 below that. For resistance, 7530, 7560 and then the 7650 level - though I don't think we will get that high today.