New Lows For Britain

Growth in the UK, or rather the lack of it, was even weaker than expected. Traders ignored a dubious rise in retail sales and sold Sterling down to yet another new low. Equities are pushing ever closer to November’s lows.

A lighter day on the trading front so far; I had to see a man about a car so missed the early Dollar strength. When I got back I didn’t fancy selling Sterling at a multi-year low, and buying it would have been spitting into a very strong wind. The US session usually offers between 80 and 160 pips on a quiet day so I’m sitting back with my charts and watching to see which way the US folks go.

Yesterday, late trading saw EURGBP crash through my tidy uptrend line (featured in Equities Fail To Hold Gains), but by this morning normal service had resumed with a new recent high at £0.9472.

I closed out my FTSE short late yesterday purely because I didn’t fancy much exposure to the vagaries of overnight markets. It was the wrong move, but that’s OK; I’d locked in a profit and my short bets in Lloyds and HSBC are showing small gains this morning. My exposure isn’t much, but I still need to decide whether to close them out ahead of the usual weekend banking headline lottery.

Hey, check out this chart and see if you get as irritated as I did:

I trade FTSE regularly, but I’m a simple bloke and recently most of my attention has been on the forex market (my missus will tell anyone that I can’t multi-task). I’ve been trading FTSE on the short side, but not with the determination, or size, that I used so successfully in the autumn.

But this chart makes it look so simple; when the index rises up to the downtrend line, sell it. Go and have a shot of caffeine then come back and book your profits! So, what’s the chart telling me now?

Two things:

1) I should look to sell any rally up to the 4050 area (although there’s room for a rally up to 4100 on today’s candle). Of course it’s only a chart, and charts do go wrong so I wouldn’t blindly sell there, but I would watch the test of the trend line and sell on a failure to hold above it.

2) So far FTSE has found support at the 3950-4000 area. A lot of the clever people are targeting a break of 3953 for full speed ahead to November’s lows. Oh, and something else worth watching out for is the weekly close on the S&P 500. In Wednesday’s blog (Sterling Rout Continues)I highlighted the break below key support at 812. The pre-open price is 811 so it should make for some interesting trading.

With GE’s (GE) results out the way there’s no data out from the US today.

Happy Trading

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