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GB100: Technical Analysis – Lower public spending and stronger Pound bearish for GB100

By IFCMarkets

Lower public spending and stronger Pound bearish for GB100

Public spending and construction activity slowed in January. Will the GB 100 index continue declining?

UK economic data were mostly weak lately. The trade deficit widened, manufacturing production growth slowed and construction output fell in January. At the same time consumer confidence index declined in February, according to the Gfk report. The ONS said Wednesday that public sector borrowing in the UK in the 11 months through February was 6% lower than the same period a year earlier. Treasury chief Philip Hammond said he intends to keep a tight rein on spending in the coming years to bring down public debt. And it is widely believed the Bank of England will hike rates at its May meeting. Lower public spending and stronger Pound are bearish for UK economic growth. However rising retail sales, as indicated by increase in February reading, is bullish risk for GB100.

GB100

On the daily chart GB100: D1 is declining after hitting all-time high in mid-January. It is below the 50-day moving average MA(50) which is falling too.

We believe a bearish momentum will continue after the price breaches below the lower Donchian boundary at 6888.46. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 7234.90. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (7234.90) without reaching the order (6888) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position Sell
Sell Stop Below 6888
Stop loss Above 7234.90

Market Analysis provided by IFCMarkets

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About Louie Lewis

Louie Lewis
Successful forex trading starts with you first. Then comes the actual strategies and techniques. I have been involved with forex and forex trading for a few years now. It is a wonderful way to build wealth. The learning never stops and I want to help others along their journey into this wonderful market of opportunity.

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