Sometimes we notice trends and trade those trends however it only becomes apparent sometime afterwards what the reason was all about. I’ve been selling any strength in the FTSE100 for some time now based on the premise than it did not seem to be able to make new all-time highs and was lagging its European and American pears. The 6900 area continued to be significant resistance even as the S&P and Dax made new all-time highs.
That was the trend I noticed. The reason is debatable but the BOE’s Carney dropped a bombshell last night; interest rates will be rising sooner than expected. The UK Chancellor backed him up this morning saying that London house prices were rising unsustainably.
So with rates rising sooner in the UK will that allow the FTSE to break key support just under 6800? Here’s another question; will traders begin to look around the world to see where the next bombshell will come from and will all eyes turn to the FED and the Greenback? It’s too early to tell of course but should this happen we could well see some follow through from the recent drop in the S&P500 through key support at 1930.
Guest post by Gary Corney of www.fxlight.co
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