Lower manufacturing and construction indices bearish for GB100
UK manufacturing and construction activity slowed in December. Will the GB 100 index decline?
UK economic data were weaker recently. The manufacturing PMI in UK declined to 56.3 in December from 58.2 in November. And the construction purchasing managers index in fell to 52.2 in December from 53.1 in previous month. Softer economic data are bearish for GB100.
The 0.5% increase on month in manufacturing production in the UK in July was above expectations for a 0.3% gain. Industrial production was up 0.2%, in line with expectations. And the National Institute of Economic and Social Research reported that GDP grew by 0.4% in the three months ending in August 2017 after growth of 0.2% in the three months to July. However, construction output for the same month was down 0.9%. Improving growth is bullish for British Pound.
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On the daily chart GB100: D1 is near all-time high.
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is above the signal line with the gap widening. This is a bullish signal.
- The stochastic oscillator is in the overbought zone, this is a bearish signal.
We believe a bearish momentum will develop after the price breaches below the last fractal low at 7432.66. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 7700.80. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (7760) without reaching the order (7507.39) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
|Sell Stop||Below 7432.66|
|Stop loss||Above 7790|
Market Analysis provided by IFCMarkets