The FTSE 100 decline continued yesterday, bouncing though at 7607, just above the 7598 support area after Donald Trump contradicted the Treasury secretary saying he preferred a strong dollar - which of course saw cable decline and cause the FTSE to jump. Until that point cable was rising above the 1.43 level and pundits were starting to talk about 1.50 being reached soon! For the FTSE today, S2 and today's key fib level are showing support at 7582 so any weakness again today looks like it will see that area. And may well bounce from there.
The Dax long worked well initially yesterday though once the ECB news came out the rise was swiftly reversed, dropping nearly 200 points from its high, before rebounding slightly. Choppy waters with Davos this week!
For today we will probably be cable driven again. With that having dropped off a bit from the 1.43 level we may see some initial FTSE 100 strength with a rise towards the 200ema at 7678 and then a drop back towards the close.
Initial support this morning is at 7626 where we have the 30min coral line, so the bulls will be keen to defend this area initially, but if it breaks then 7600 and 7582 looks like the next viable supports that would be worth a long trade from.
If the lower of these supports breaks then it starts to look an awful lot more bearish, and 7350 is distinctly possible.
If we presume that 7580 level holds then that could have shaken out the weak bulls that have been holding up at 7700+ and could now act as a springboard to push higher again. With Davos out the way next week we may settle down a bit, and the current bullish trend can properly resume!
We have GDP data at 09:30 this morning, forecast to be 1.4% down from 1.7% previously. Carney is addressing Davos at 14:00 as well.