Interactive Investor

How a technical analyst would trade Brexit uncertainty

18th January 2019 08:56

Alistair Strang from Trends and Targets

After a bumpy week for stocks, our chartist names the big numbers to watch for sterling and the FTSE 100.

GBP:USD 

With the strong & stable UK government working wonders with their negotiation and organisation skills, it was only a matter of time before the markets noticed, reacting positively. Or perhaps, more probably, have gotten bored with a lack of anything actually happening. The pound/dollar relationship is a case in point.

For quite a while it appeared destined for parity, but the last week has seen the pairing explode into territory where mild optimism is about the only thing possible.

To be quite clear, this pair must exceed the dark blue line on the chart, presently at $1.38, before we dare upgrade our optimism level from mild to extremely sceptical!

Only above dark blue will scrub our big picture calculations pointing at parity and below. However, a stay of execution from the immediate route to misery appears possible with the result that anywhere above $1.308 (the immediate target) allows recovery to $1.33 next. 

If exceeded, secondary calculates at $1.357.

There's a fair chance we're "only" watching delaying tactics prior to a real drop and, if this is the case, the visuals indicate some stutters at the $1.33 level.

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

FTSE for Friday

The FTSE 100 index closed at 6,835, in the process providing a relatively entertaining day. If we gauge by after-hours futures performance, apparently movement now above 6,862 points should bring a climb to a tight fisted 6,875 points. However, if bettered, our secondary calculates at 6,899 points.

In fact, if the PM and her opposition number were to resign, replaced by mime artists, there's a chance the index could quickly surge to 6,956 points on a tidal wave of sensible sounds from UK party leaders...

However, despite the state of after hours futures, we're not entirely confident as to the markets intentions, suspecting weakness now below 6,798 shall bring reversal to 6,722 points!

Have a good weekend.

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

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. 

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