At mid-day today the Bank of England publishes its Quarterly Inflation Report. Because they often use this document to back interest rate changes, this has led to reams of speculation as to whether they might raise rates today. If, as assumed, they will take the Bank Rate to 0.50 from 0.25 per cent this would mean that the interest rate doubles. It also means that they should admit that their post-Brexit referendum cut was unnecessary and wrong. They could of course change rates by on eighth of a per cent, as they did many times in the 1970s.
Bloomberg reports that despite the recent rise in crude oil prices Bahrain’s government has asked for financial help from Saudi Arabia, the United Arab Emirates, and possibly Kuwait. This is because the country’s foreign currency reserves shrank by 75 per cent over the last two years. As their currency, the dinar, is pegged to the US dollar a devaluation might reverberate around other countries in the Middle East who do the same with their currencies.
DAX 30
A RSI reading of 86.1 on yesterday’s new record high close – the highest reading this century – makes me feel very nervous indeed.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
Slightly jittery yesterday forming a shooting star candle, part of what’s starting to look more like symmetrical triangle consolidation. Support on the downside appears stronger than resistance to the upside.
SHORT TERM TRADER: Short at 7554; stop above 7570. Target 7320.
POSITION TAKER: Square.
S&P 500
A sharp rejection from yesterday’s new record high has formed a dragonfly doji, even though this index is no longer overbought. Careful because this market is unsteady.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Pausing ahead of the MPC meeting today. Also worth noting that at 15:00 Eastern time President Trump is widely expected to announce a new governor for the Federal Reserve.
SHORT TERM TRADER: Long at 1.3290; stop below 1.3190. Target 1.3575.
POSITION TAKER: Square.
EURO/US DOLLAR
Redrawing the horizontal line we end up with a head and shoulders top for the euro. This would tally with momentum being so bearish. The Catalan problem hasn’t gone away, but is on the back burner, as the ex-leader Puigdemont refuses to return to Madrid to stand trial.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Testing immediate trend line resistance today as we remain trapped in the middle of the range since July. Momentum is mildly bearish.
SHORT TERM TRADER: Small short at 1275; stop above 1285. Target 1220.
POSITION TAKER: Square.
Nicole Elliott is a long-standing Member of the Society of Technical Analysts and has taken over the IC’s trading coverage. She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.
