
The ECB delivered what many had expected, new measures to encourage bank lending. The idea is to help businesses and individuals buy stuff with borrowed money, this creates demand for goods and services and boost inflation. This is one way to fight deflation, but the question is will it work? Those measures are fine providing the borrower is happy to buy. What about if the borrower is not happy to buy?
When people are concerned about the future they tend to cut spending and to start saving more, the banks can provide all the money they have this will not change anything, people won't touch it. This is why the economy is still weak after many years of stimulus measures. The problem in Europe is that people are not optimistic about the future, this is the major obstacle to consumption.
Today we have another important announcement, the nonfarm payrolls at 1.30pm. Like yesterday expect some volatility, stop losses will be at risk so if you are a day trader you should not trade ahead of the announcement.
FTSE 100 |
Today |
Next few days |
Next few weeks |
Trend |
Up |
Down |
Down |
Action |
Buy |
Sell |
Sell |
Trend reversal |
50% |
50% |
50% |
|
Key Reversal Levels |
FTSE 100 cash |
below 6795 |
above 6882 |
above 6945 |
FTSE 100 Future |
below 6789 |
above 6876 |
above 6939 |
|
Trade Setups |
The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.
Research provided by e-Yield