News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfs2Iz https://t.co/6dAqxsVfxJ
  • The results of this weekend’s German Federal Election will likely dominate Euro sentiment at the start of the week ahead but after a possible EUR/USD bounce they will have little long-term impact. Get your weekly $EUR forecast from @MartinSEssex here: https://t.co/Xu3ZT7EtrW https://t.co/5VHKn52MaA
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here: https://t.co/nAa0fHq4Np https://t.co/mf9rsmIvaW
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/mYWO0Eta0P
  • Sterling continues to contract into trend extremes and the focus is on a pending breakout in the weeks ahead. Get your weekly $GBP technical forecast from @MBForex here: https://t.co/ZvEMQuFjSs https://t.co/rMmq9cehnY
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/tm4k3IVzHr
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9FlspUVZz https://t.co/FFMy5O9YoY
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/jZHcyAZ5SU
  • Further your forex knowledge and gain insights from our expert analysts on EUR with our free guide, available today: https://t.co/XtydfV5wS6 https://t.co/Iw9haaHAnn
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sr63f https://t.co/raO3gCGqQ6
FTSE 100: With China Stocks Plunging 6%, Will Traders Buy A Dip?

FTSE 100: With China Stocks Plunging 6%, Will Traders Buy A Dip?

Alejandro Zambrano, Market Analyst

Talking Points

  • The FTSE 100 has now reached the 5700 to 5800 range, where I would expect traders to buy.
  • However, the macro and technical picture is gloomy: the China CSI 300 index plunged 6.02% and Dallas Fed Manufacturing Index takes the sharpest plunge in 11 years.
  • With this in mind, some traders will probably wait for a complete bullish trend instead of buying the dip.
  • Nationwide data is also on tap today: U.S. house prices, Markit PMI Services, and Consumer confidence, along with Richmond Fed data.

Losing Money Trading? This Might Be Why

The FTSE 100 has now given back 50% of last week’s gains. This is in line with yesterday’s outlook, when we stated that “In the short-term, the trend is bearish below this week’s high of 5944 and the index may drift to the 5700 to 5800 range.”

As price is now in the 5700 to 5800 range the risk/reward ratio favors long positions and signs of people buying in this zone (similar to a bullish candlestick pattern) should be enough to initiate a trade with stops below last week’s low.

However, there are legitimate reasons for the latest slide and strong caution is warranted.

Firstly, the China CSI 300 index (blue chip stocks of China) is down 6.02% in today’s trading. The decline is strong enough for the index to have breached its August lows. Simple technical analysis suggests that the CSI 300 index may decline an additional 15% before support from November 2014 meets price. This may weigh heavily on the FTSE 100.

Secondly, the Dallas Fed Manufacturing Index takes the sharpest plunge in 11 years, the index having declined to -34.6 from -20.1. These are levels not seen since the 2008 recession. As an example, at the onset of the 2008 recession the Dallas Fed index was at -22.3. The situation is different today, with the current U.S. crisis being in the energy markets, hence the “pain” should be more pronounced in the country’s biggest oil producing state, yet yesterday’s reading was outright bad.

With this in mind, some traders will probably wait for a complete bullish trend instead of buying the dip. Right now a break to this week’s high of 5944 is needed (or the next swing high, which still needs to be created between today’s price and the current weekly high).

Traders opting for a bearish view will probably short-sell on a correction to the 5850 to 5944 range.

Nationwide data is on tap today; U.S. house prices, Markit PMI Services, and Consumer confidence. Richmond Fed data is also on tap. See our economic calendar

FTSE 100 | FXCM: UK100

Please add a description for the image.

Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Twitter: @AlexFX00

Read Charts Like Alejandro: Join a London Seminar or get the On-Demand Version

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES