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Equity markets are in the green this morning, perhaps worryingly so given the potential for a negative surprise from the Bank of England at midday. Traders are currently pricing in an 80% chance of a rate cut, but just take a step back and recall the last time markets priced in an 80% chance of something happening.
With a quiet morning expected given the potential for surprises around midday, we note financials and house builders topping the UK 100 , which is also catching a bid from the miners – not at the forefront of things news-wise, but trudging Northwards nonetheless. Note precious metals looking toppy which goes to reinforce the view that there’s a decent level of risk-on sentiment dominating. This could all change later on, however, as markets decifer Mark Carney’s language for indications as to how the Bank of England views the state of the UK economy.
The UK 100 joins the S&P500 in a rising wedge pattern – often seen as a bearish formation, though note Dow Jones futures are out above the ceiling of their own. The DAX30 has broken out strongly on EUR weakness versus GBP, potentially a continuation of the bullish flag pattern highlighted yesterday with a bulls targeting the pre-Brexit vote high of 10485 . Gold is testing $1327 support. Further to go or will it bounce?
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The UK 100 is nearing the apex of its rising wedge pattern ahead of the BoE announcement. A prior breakout attempt failed this morning, yet the index remains near the ceiling of the formation. Note the longer-term bullish patterns we recently highlighted (3-week bullish flag, 11-month bullish inverse H&S reversal) are still valid.
Watch levels: Bullish 6755, Bearish 6690
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
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The DAX30 has broken out above 10000 in a continuation of the bullish flag pattern. On towards 10400?
Watch levels: Bullish 10115, Bearish 9875
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
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Wall Street/Dow Jones futures have broken above what would normally be considered a bearish technical pattern (rising wedge). Note RSI overbought and the index selling back from this morning’s new record high.
Watch levels: Bullish 18520, Bearish 18450
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
Gold has is testing support, with a break below seeing that level become resistance. $1320 may prove to be the next support level.
Watch levels: Bullish $1335, Bearish $1315
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
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