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A wave of risk appetite swept across Asian equity markets on Monday in a rally fuelled partly by dovish remarks on Friday from St. Louis Fed president James Bullard, who said the projected path for rate increases may be “overly aggressive”. Meanwhile, oil prices rose on speculation of deeper-for-longer production cuts.
Short term
Trade view / 15 July 2016 at 9:15 GMT

Short relief for the FTSE

Director / PIA First
United Kingdom
Instrument: UK100.I
Price target:
Market price:
Background

While we remain bearish over the long term, our medium-term perspective is market neutral/bullish after the reaction rally from the UK referendum vote.

We highlight a reverse head-and-shoulders pattern and target a move above all-time highs towards 7,400 over the medium term. The bullish outside monthly candle indicates a move higher over the summer months and beyond. However, drilling down to the short term, evidence of a corrective move lower or temporary pullback is more than likely.

The weekly chart shows rejection from the approach to the previous long-term upwards trending support, now turned resistance. This recent bar looks likely to form a bearish shooting star and this will assist in a corrective move into next week.

Daily and 4-hour charts have shooting star, bearish outside and bearish engulfing candles so adding to the negative theme.

Management and risk description

Once shorts are triggered we will use the recent high as a hard stop and look to 3 targets over the coming days/weeks

Parameters

Entry: Sell FTSE (UK100.i) at current levels

Stop: A break above 6750

Target: 6500, 6290 & 6000

Time horizon: 1-4 weeks

The Brexit rally has caught sellers by surprise
f1
 Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more

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  Source: Saxo Bank

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 Source: Saxo Bank
 
— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
20 July
Ssander Ssander
hi steve, we are now close to the sl point, has your view on this changed?
20 July
Steve O'Hare - First 4 Trading Steve O'Hare - First 4 Trading
Good morning, yes the expected sell-off has not materialised and this trade looks likely to be stopped. Our daily predictive analysis is buying dips today and targeting the 6750 level
20 July
Ssander Ssander
thanks!

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