Friday saw some pretty wild swings with the tax bill finally passing, after markets had declined on more political uncertainty in the US, with Trump/Russia etc still hanging in the air. US markets dropped sharply after former national security adviser Michael Flynn’s guilty plea for lying to federal agents, however, with the tax bill then passing, markets rallied hard. Bitcoin once again broke above 10k, then 11k shortly thereafter!
Meanwhile, in a show of strength the U.S. and South Korea began a five-day joint air exercise on the Korean peninsula involving 230 aircraft and 12,000 American troops.
For today, the FTSE looks like it might well be in its own little world. We have climbed back from Friday's low and now have a bullish 2 hour chart, showing support at the 7337 level, which looks good for a long entry. I am expecting a rise today, building on the strength shown on Friday afternoon after the bill passed. That said, there is resistance pretty close by at 7385 where we have a key fib level. The bulls will be keen to break this and push above 7400 this week, though it's probably a bit too early in the month to start talking about Santa Rallies. We have had the stereotypically weak November, which is usually a precursor to a bullish December so we may well see a rise back towards 7500 this month.
If the bulls weaken though, then the bears are waiting in the wings to take the FTSE back to the bottom of the 2017 range at 7100.
For today, I am watching initial support at 7337 and thinking that buy the dip around this support area is a good plan. We have the daily pivot and the 30min coral support at 7323 just below this - could always fade in 2 longs at both these levels if you so wish.
Initial resistance is the 2hr coral at 7369, so we may get a small dip initially. If the bulls can defend the 7337 level then a subsequent rise for today looks good. The US has regained the ground lost initially on Friday (the S&P put in a low at 2605, and has now gapped up to 2660), so there is still decent bull power.
So, fairly simple plan for today really: buy any dip down towards 7337 and 7325. However, if 7320 breaks then bears will be looking to target 7288 and lower, so flipping to a short will be a good move.