UK shares and sterling leapt as the Tories raced to victory, clearing a path to end the Brexit deadlock. The mid-cap FTSE 250 touched record highs after markets opened on Friday, with investors piling into domestically exposed stocks that have dwindled under the twin threats of a no-deal exit and a Labour government led by Jeremy Corbyn. The rally was also supported by an announcement that the US and China had struck a landmark trade deal.
FTSE 100 Outlook and Prediction
Cable has indeed been capped at the 13500 level as mentioned on Friday, and if that were to remain the case for today then the FTSE 100 should experience further upside. 7404 is initial resistance where we have the key fib level, and overnight high. The bears did indeed appear on Friday and we had a nice initial drop off the 7415 resistance level to yield some bear points. If the bulls can surpass the 7404 level today then we should see a decent rise towards the 7500 level, and possibly R2 at 7538.
The ASX 200 had a bullish Monday and I am thinking that we will also have a bull Monday as more money flows into stocks following the election. As such, I maintain my buy the dip bias for the moment.
Support wise, the daily pivot at 7355 is the main level to start with, and we also have the rising 100 Hull MA on the 2 hour at 7330 for the moment, but could reach 7345 by midday, to give some support to this area as well. If the bears were to break below 7355 though, then a drop down to the 7300 area is distinctly possible, as we now have daily 25ema support here, along with the 200ema on both the daily and 30min charts. As such, a long here is worth a go. We are getting into Santa Rally territory now as well, and with the S&P within touching distance of 3200 we may well see a further push higher on that for further positive year end headlines.
If we were to dip to 7300 early this week then I think this is a decent entry to hold till year end. We have seen a decent hold of the 7130 level earlier this month and the bulls will be keen to keep the bullish momentum going, at least till early January.
Thinking therefore for a bull Monday today watching 7355 and 7300 as support, and if the bulls can push past the 7404 level. Friday's high and the 20 day Raff channel at 7430 would be next up and a potential stumbling block, but if cable drops we may well see that level surpassed and a rise towards 7500.