Draghi-driven drop in equities extends to FTSE

11 March, 2016

As noted earlier in the day, European Central Bank (ECB) President Mario Draghi’s remarks during Thursday’s ECB press conference prompted a rather abrupt sell-off in global equities and a strong surge for the euro. This was largely due to Draghi’s assertion that he did not anticipate a need for further rate cuts. Although he vaguely qualified this statement by saying that the situation could change if new developments were to arise, market participants interpreted his remarks as closing the door on further stimulus.

Besides the dramatic upswing for the euro, perhaps the most notable market reaction to these remarks was a plunge in European and US equities. Along with the German DAX and US benchmark indices, this drop could be readily seen on the FTSE 100 chart, which retreated sharply from a major confluence of resistance around the 6200 price level.

For the past month, the FTSE has been rising up from its February multi-year lows. In early March, the index reached the noted 6200 resistance level, but has since been unable to breach this important level. Also serving as resistance before Thursday’s plunge was the key 200-day moving average, which has served as a major resistance factor since mid-year last year. Additionally, a well-defined downtrend resistance line extending back to last May’s 7060-area high has also helped to reinforce the resistance area within the past week.

This technical confluence of resistance has worked well in conjunction with Thursday’s Draghi-driven disappointment to sustain the recent downtrend that has been in place for the past nine months. If this resistance area continues to hold in the event that the FTSE remains pressured, any downside follow-through below the 6050 support area and then the 50-day moving average could open the way for a further tumble towards February’s lows. In this event, the next major downside target is around the 5750 support area. Any unexpected breakout above the noted resistance area would invalidate this technical trend outlook.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: