Video

#SaxoStrats
Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Trade view / 17 June 2013 at 5:12 GMT

Buy FTSE100 on dip or breakout

Price target:
Market price:

Trade idea background
The FTSE100 has been in a fierce down trend since the index peaked on May 22 before finding support this past Thursday. Overall Thursday was a strong day for the markets, more or less without exception. Friday prices pulled back and appear to have been consolidating the reversal off the lows. This is supporting the notion of a global bounce in equities; at least for the short term.

It wasn't all that surprising to see a bounce from the 6,200 level since this level has acted as support in the past. The 6,200 level is key for the bullish prospects for this index on more or less every time frame and it would be surprising to see it break right away given that the technicals are stretched to the downside.

The consolidation in equities on Friday is setting up a nice opportunity to go long towards the outlined resistance levels shown in the charts below, either on further pullback or on a break above the highs in the current bounce.

The down trend outlined by the down sloping trend channel in the chart below has been broken; which also strengthens the case of a bottom in place.

Oscillators are depressed and in need of some relief before a possible resumption of the down trend. The 200-day moving average is indicating that we still are in a larger positive trend but the 50-day moving average has turned negative indicating that the medium term trend has turned negative.

Trade management and risk description
Once the trade is initiated and the 6,350 level is broken; move the stop higher to 6,290. Take profits at the target level.

If one buys a dip towards the 6,255 level one could take profits at or close to 6,350 and re-enter long if we break above.

The risk to this set up is that the market is even weaker than expected; which could force prices lower ahead of the outlined target.

Trade idea parameters

Entry: On pullback towards 6,255 or on break of 6,350

Stop: 6,190 on pullback or 6,290 on breakout trade

Target: 6,456

Time horizon: one week

Chart: FTSE100 Daily chart overview

 FTSE100 Daily chart overview

Chart: FTSE100 Hourly chart buy the pullback

FTSE100 hourly chart buy the pullback

Chart: FTSE100 Hourly chart buy a breakout

FTSE100 Hourly chart buy a break out

Chart: FTSE100 Weekly development chart

FTSE100 Weekly development chart

Disclaimer:
Non-independent investment research
This investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Saxo Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. » Read more

6y
Lubomir Lubomir
johan, very interesting idea! I expected uptick to happen on friday, while opening long, but wall street DOW down pressure caught me to record some L
6y
Lubomir Lubomir
what a boring session moving in 30pts. for those, who joined just in the morning and did not go long the moment market opened in the midnight :-) as usually, FTSE waits for inspiration from US
6y
Johan Berntorp Johan Berntorp
Yes, it's calm but that could very well change soon as you say.
6y
Frank Pabari Frank Pabari
Hello Johan, I Have bought in @6359 stop loss @6250 and set target @6400 what's the resistance on it thx
6y
Johan Berntorp Johan Berntorp
Short term I see resistance at 6 366, support at 6 330, 6309. As things stand now I don't wan't to see this market below 6 270.
6y
Lubomir Lubomir
interesting to see a deviation FTSE vs DOW in one chart :)
6y
Lubomir Lubomir
johan, one cannot fight these markets...so vulnerable
6y
Johan Berntorp Johan Berntorp
Well, now we have really nice levels to work with. On the sp500 for example, high of day at 1646 and 1622. A break above is short termbullish and a break bearish. For FTSE100 3670 on the bull side and 6270 below. Short term that is.
6y
Johan Berntorp Johan Berntorp
SP500 intraday during cash market opening hours only has a 15 point range even though this past hour has been packed with action.
6y
nickolas nickolas
ок!
4y
goldurgent goldurgent
This comment has been redacted

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