Yesterday’s general election in Italy, to form the country’s 66th government since becoming a democratic republic in 1946, looks set for another inconclusive result. As has been the case in other recent elections, the ruling establishment parties have seen a catastrophic collapse in votes while outsiders and upstarts have garnered a lot of new supporters. At the moment exit polls suggest the 5 Star movement, established by a comedian, is in the lead with 31 per cent of the ballot. The right-leaning coalition headed up by veteran Silvio Berlusconi has roughly 36 per cent of the vote – not the 40 per cent needed to form a government - Northern League doing the heavy lifting with 18 per cent.
In Germany, the SPD party members have given the go-ahead to form a coalition with the CDU, Angela Merkel as Chancellor, breaking the deadlock since September’s election. Both parties saw their worst ever performance since WWII.
DAX 30
Miraculously managing a weekly close just above important horizontal support at 12000 though momentum is increasingly bearish. The close was below trend line support from the early 2016 low though, suggesting downside pressure is likely to increase this week
SHORT TERM TRADER: Small short at 12535; stop well above 12400. Target at 11700.
POSITION TAKER: Small short with a stop above 12400. Will add to the position on a weekly close below 12000 and on a daily one below 11700.
FTSE 100
Another index closing just above important horizontal support at 7100. However, the weekly candles of the last three sessions together form an evening star combination, a bearish chart patter which has increased bearish momentum.
SHORT TERM TRADER: Small short at 7180; stop above 7325. Target at 7000.
POSITION TAKER: Short at 7250; stop above 7325. Target the 6675 area.
S&P 500
Managing a weekly close above trend line support taken from the November 2016 low, but bullish momentum has evaporated completely.
SHORT TERM TRADER: Small short at 2720; stop well above 2740. Target 2550.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Hardly the bounce we had hoped for as President Trump has certainly ruffled a lot of feathers. Remember that US employment data is due Friday.
SHORT TERM TRADER: Square.
POSITION TAKER: Small long on yesterday’s close at 1.3775; stop below 1.3600. Target 1.4250.
EURO/US DOLLAR
As we had suspected and just what the doctor ordered. The blip below the trend line and the 1.2200 level was a false break and an opportunity to shake out flaky longs. The current range between 1.2200 and 1.2500 will hold, as evidenced by the commodity channel index.
SHORT TERM TRADER: Small long at 1.2267; stop well below 1.2200. Target 1.2500.
POSITION TAKER: New small long at 1.2270; stop well below 1.2200. Target 1.2500.
GOLD
Certainly, a market looking for direction with a big weekly dragonfly doji just above the psychological 1300 level. Meanwhile the MACD is increasingly irrelevant.
SHORT TERM TRADER: Square.
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.
