Slowing mortgage and sales data preceded a report of better-than-forecast retail sales in February. Will the GB100 advance continue?
UK economic data have been mixed recently: retail sales growth in the UK was little changed in February, ticking to 4% over year from 4.1% in January. The expectations were retail sales growth would slow to 3.3%. Reports a week later indicated mortgage approvals in February and realized sales in March declined more than forecast. However the technical setting indicates upside momentum for UK stock market. At the same time a couple days ago the British parliament voted on eight different Brexit alternatives Wednesday but none received the majority support, increasing the likelihood of a hard Brexit. The economic and political uncertainty of the terms of UK’s departure from the European Union remains an unresolved downside risk for UK economy.
On the daily timeframe GB100: H4 is rising after bouncing off support line. It has breached above the 50-day moving average MA(50). These are bullish developments.
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is below the signal line with the gap narrowing. This is a bullish signal.
- The RSI oscillator is rising but has not yet reached the overbought zone.
We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 7254.37. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower fractal at 7151.73. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (7151.73) without reaching the order (7254.37) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
Position Buy
Buy Stop Above 7254.37
Stop loss Below 7151.73
Market Overview
Stocks rebound as US-China talks resume
Dollar strengthens despite Q4 GDP downgrade
US stock market rebounded on Thursday as US and China resumed high level negotiations in Beijing. The S&P 500 rose 0.4% to 2815.44. The Dow Jones Industrial Average advanced 0.4% to 25717.46. Nasdaq composite index added 0.3% to 7669.17. The dollar strengthening continued at same pace despite final Q4 data showed US economic growth slowed in the fourth quarter from above-trend rates. The live dollar index data show the US Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.2% to 97.19 but is lower currently. Futures on US stock indexes point to higher openings today.
FTSE 100 rises as May offers to resign after Brexit approval
European stocks ended marginally lower on Thursday. Both the EUR/USD and GBP/USD continued falling but are currently higher. The Stoxx Europe 600 index slipped 0.1%. Germany’s DAX 30 however edged up 0.1% to 11428.16. France’s CAC 40 slid 0.1% while UK’s FTSE 100 advanced 0.6% to 7234.33 as Prime Minister Theresa May offered to resign if her Brexit deal was finally passed by Parliament after two rejections.
Shanghai Composite leads Asian indices rebound
Asian stock indices rallied today as US Trade Representative Lighthizer and Treasury Secretary Mnuchin started the round of trade talks in Beijing. Nikkei ended 0.8% higher at 21205.81 with yen little changed against the dollar as industrial production resumed expansion after decline in January. China’s stocks rose: the Shanghai Composite Index rallied 3.2% and Hong Kong’s Hang Seng Index is 1% higher. Australia’s All Ordinaries Index extended gains 0.1% despite Australian dollar’s climb against the greenback.
Brent down
Brent futures prices are edging lower today. Prices inched lower yesterday against the background of reduced global supplies as major oil producers comply with crude production curbing agreement: Brent for May settlement, which expires at Friday’s settlement, closed 1 cent lower at $67.82 a barrel on Thursday