FTSE Spread Betting Market Trades Wide Range Amid Volatility
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 28 September 2011
Bulls bought just about everything they could get their hands on yesterday as investors piled back into risk assets.
Technically there have been some very bullish candlestick formations on the daily charts of many spread betting markets with lots of hammers followed by a confirmation of a possible change in trend.
The hammers have been followed by some big bullish engulfing candlesticks and so those who have bought near these lows are getting excited that they've picked the bottom.
But as we've seen too many times in the past, those who attempt to buy the lows all too often have their fingers burnt over the next few days.
Volatility is dangerously high and makes for difficult trading conditions which are made even worse by the fact that no one knows what the outcome of the Eurozone will be.
This concoction of uncertainty continues to whip markets around and if one or two of the important players say something the bulls don't want to hear we could be back down to the lows again.
The FTSE has been oscillating between 5400 and 5000, albeit below here on an intraday basis, for a few weeks now. However, we have seen several times in these scenarios that fortune favours the brave so committing to a position for a longer term view could pay off in the end.
This morning sees some of yesterday's gains being wiped out with the FTSE lower by 60 odd points to around 5235. This came after the Dow fell back from its highs towards the end of the session, proving in part the points made above.
All eyes remain on Germany and Greece to see if they will get their next tranche of bailout funds.
The German Chancellor faces a crucial vote of confidence tomorrow as her parliament votes on the extension of the EU bailout funds. The vote is expected to be passed however the more important aspect is to what extent members of her own coalition rebel.
If she does suffer a big slice of her party voting against the plan, future votes will become more difficult in future. This would have the potential to through a spanner in the works of Europe's paymaster upon whom the whole project relies.
The Dollar sold off almost one percent on the FX spread betting markets yesterday, handing big gains to the likes of EUR/USD, GBP/USD and AUD/USD.
This morning the Dollar is seeing a revival as the equity markets dip on the open. EUR/USD is slightly lower at $1.3570 and GBP/USD is roughly flat at $1.5640.
USD/JPY is down a little to ¥76.50 and the pair remains tentatively above the ¥76.00 level. The pair has managed this for the past couple of months but the Dollar hasn't managed to gain back anywhere near the same amount of ground against the Yen than it has against other currencies.
The ultimate risk currency, the Australian Dollar, had a bumper day and almost reached parity with the Dollar, peaking just below the $1.0000 level before running out of steam. Today the AUD/USD has fallen back from yesterday's high of $0.9985 to $0.9885.
The pair still remains well below its short term downward trend line where a move above parity and then $1.0025 will be needed to break that.
The roller coaster that is gold has found a bit of calm in the last couple of days.
The gold spread betting market is at $1654 at the time of writing and the bulls will want to test yesterday's highs around $1676. At the same time, in the near term they'll be hoping support around $1630 will hold up.
The mass shake out earlier this week will have interested many people who've been waiting for a sharp correction like the one we saw so they could go long.
For now the long term uptrend is still very much intact so a test of the all time highs in the future should not be ruled out.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'FTSE Spread Betting Market Trades Wide Range Amid Volatility' edited by SD, updated 28-Sep-11
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