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Market Outlook: EU leaders postpone Commission decisions

Must finalise by Wednesday
July 1, 2019

Last night the leaders of all 28 EU countries, including Britain’s Theresa May, met for an emergency summit to decide how the horse trading would divide up the plum jobs up for grabs at the EU Commission and the head of the ECB. As is typical in Brussels, talks continued throughout the night yet by 05:00 am nothing had been decided. This is their third attempt at filling the posts which must look to balance gender, nationalities and link to the size of each country’s population.

Markets in Hong Kong are closed today to commemorate the day 22 years ago, when Britain’s lease over the island expired. Protests were planned (linked to the issue of extradition to China) and they have smashed some windows at the legislature. Reuters reports that over 100 riot police are at the scene, using batons and pepper spray to try and disperse the people. A formal rally is due to start at 07:30 BST and Chief Executive Carrie Lam appeared in public for the first time in a fortnight.

DAX 30

Almost overbought as we gap higher on news that Sino-US trade talks will resume. The index has now retraced almost a Fibonacci 76 per cent of 2018’s losses. As of today, Swiss stock exchanges have lost their equivalence with EU ones; no one quite sure how this will work or what might be the punishment meted.

 

SHORT TERM TRADER: Square.

 

POSITION TAKER:  Square.

FTSE 100

Another index gapping higher this morning as Conservative party PM contenders promise lots of new spending. Though not overbought the commodity channel index is flashing a little warning. We are almost back up at April’s high and have yet to reach 76 per cent Fibonacci retracement resistance.

 

SHORT TERM TRADER:   Stopped out of my short position this morning.

 

POSITION TAKER:  Square.

S&P 500

Overbought again on the weekly chart on today’s somewhat tentative gap higher.

 

SHORT TERM TRADER:  Stopped out here too this morning.

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

An inconclusive week, though the commodity channel index did tick up over the -100 line, as we spend six consecutive weeks trying to form an interim base.

 

SHORT TERM TRADER:  Long at 1.2740; stop below 1.2630. Target 1.2900.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Bullish momentum fading as we retreat from 38 per cent Fibonacci retracement resistance following last week’s tiny doji.

 

SHORT TERM TRADER:  Little long at 1.1365; stop below 1.1300. Target 1.1435, maybe more.

 

POSITION TAKER:  Square.

GOLD

Still overbought despite last week’s fairly dramatic shooting star and this morning’s gap lower. These two add weight to our view that an important interim high is probably in place, that the push above 1400 will ultimately be seen as a false break, and that the 1100 to 1400 band established early 2013 will remain in place. Also worth noting that in 2018 reports of cyberattacks by financial services companies to the FCA have ballooned from 69 in 2017 to 819, accountancy firm RSM says.

                            

SHORT TERM TRADER:  Small short at 1407; stop above 1425. Target 1335.

 

POSITION TAKER:  Short at 1404; stop above 1440. Target 1320.

Nicole Elliott is a long-standing member and Fellow 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.