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FTSE for Friday: will US jobs data throw a curve ball?

8th October 2021 08:27

Alistair Strang from Trends and Targets

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There's plenty to move markets currently. Independent analyst Alistair Strang studies the top UK index, gold and bitcoin.

It’s US ‘Non Farm Payrolls Day,’ with an apparent expectation of a fall in jobless numbers around 400,000 people. It all kicks of at 13:30 and, with the US markets presently treading on egg shells due to China Evergrande, Covid, energy prices, and a nuclear submarine collision in the South China Sea, things could go horribly wrong quite fast.

However, the UK market has been showing surprising strength, closing Thursday at 7,083 points. It now need only exceed 7,095 points and we should anticipate a climbing cycle to an initial 7,145 points. If bettered, we can calculate a secondary at an impressive 7,211 points.

As always, beware any triggering movement which occurs in the opening seconds of trade. As it’s Payroll Friday, a curve ball should be expected.

Our converse scenario triggers if London manages below 7,035 points. Reversal toward 7,018 points looks possible with secondary, if broken, at a hopeful bottom of 6,995 points.

Source: Trends and Targets. Past performance is not a guide to future performance

Gold

As for gold, something a bit odd happened a few sessions ago, a circled movement we’re inclined to suspect is providing early warning for coming trouble.

The uptrend since March 2020 broke, the price quickly recovering above the trend as the market was clearly not in the mood for a sharp reversal. However, now below $1,727 calculates as capable of reaching down to 1,695.

If broken, our secondary works out with a hopeful bottom at $1,620. At present, gold is feeling a little fragile.

Source: Trends and Targets. Past performance is not a guide to future performance

Bitcoin

There’s an ongoing effort attempting to make bitcoin the ‘new gold’ in terms of perceived value. For time immemorial, gold has been the favoured place of safety for money. After all, no matter what, there’s still gold.

Suspecting this effort is doomed to failure, the question is simple. Can we identify the level at which ‘the last straw’ breaks for bitcoin?

It’s a fairly understandable stance, one which makes more sense than our own dislike for crypto currency. We don’t like it, simply due to the haphazard nature of the crypto marketplace. From our perspective, too often we see movements which appear leveraged against traders.  

The immediate situation for bitcoin (presently trading around $54,600) using conventional arguments, suggests above $55,800 should make an attempt at the $60,000 level next. If bettered, there’s a heck of a calculation which gives $70,600 as the potential for a new all-time high.

Source: Trends and Targets. Past performance is not a guide to future performance

What concerns us, should the trigger level be exceeded, is any path to glory is liable to be paved with a few corpses. Bitcoin, similar to other crypto markets, is perfectly capable of throwing fake movements at traders, these bizarre momentary drops intended to trigger sell orders, prior to a movement up.

In fact, the other wizard wheeze of a brief high to trigger buy orders, then equally brief reversal to trigger stop loss levels, isn’t an unknown ploy in the crypto market place.

If we stop grinding our axe, we can perhaps answer the question. Where’s the level where Bitcoin risks becoming a lost cause?

Visually, anything now below $29,000 would justify extreme levels of concern. This risks triggering reversal to an initial $23,700 with secondary, if (or when) broken, at a bottom around $4,700. To be fair, when we review recent movements, even below $40,000 will provide strong reasons for a very raised eyebrow.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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