In what US secretary of state Mike Pompeo has described as ‘’the toughest sanctions ever put in place on the Islamic Republic of Iran’’, the US plans to reinstate all sanctions removed by ex-President Obama in 2015 as part of a nuclear deal. The European Union condemns the move and insists it will continue to adhere to the de-nuclearisaton plan; this will be difficult in light of the financial sanctions involved.
Data from China this morning showed that the Caixin Composite PMI dropped to 50.8 from 53.1, the lowest reading since February 2016, and compares to a peak in February this year at 54.7.
DAX 30
Finishing off last week with a flourish and spike high on Friday, still below the neckline of a massive head & shoulders top, and below an important cluster of what is now resistance levels around 11755.
SHORT TERM TRADER: Short at 11200; stop above 11755. Target 10400.
POSITION TAKER: Short; stop above 11700. Next target at 10700.
FTSE 100
Last week’s squeeze above 7100 ended with a spike high against 7200 and below Fibonacci 38 per cent retracement from the record high, keeping the MACD clearly in bearish territory. On Friday all 48 EU banks passed their stress tests (as failure is not an option), but Barclays and Lloyds were found to be among the weakest links.
SHORT TERM TRADER: New short at 7080; stop above 7200. First target 6865.
POSITION TAKER: Square.
S&P 500
Another index with a spike high on Friday just under the 50 per cent retracement level and despite favourable US employment data. President Trump spent all weekend rallying the troops for tomorrow’s election.
SHORT TERM TRADER: Added to short this morning taking the average entry level to at 2740; stop above 2780. Target 2600.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Last week’s rally has turned momentum bullish and sets up a potential double bottom against this year’s low at 1.2660.
SHORT TERM TRADER: Small long at 1.2900; stop below 1.2900. Target 1.3100.
POSITION TAKER: Square.
EURO/US DOLLAR
Bearish momentum easing again with last week’s little dragonfly doji as we try to gold close to the 50 per cent retracement support level. Another currency with a potential double bottom at 1.1300.
SHORT TERM TRADER: Small long at 1.1440; stop below 1.1300. Target 1.1700.
POSITION TAKER: Square.
GOLD
Odd price action last week as the market struggles at the 50 per cent retracement level and forms a hanging man candle.
SHORT TERM TRADER: Tiny short at 1227; stop above 1240. Target 1190.
POSITION TAKER: Square.
