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GB 100 Index Technical Analysis - GB 100 Index Trading: 2018-05-04
Expansion in services and construction sectors bullish for GB100
UK services and construction activity accelerated in April. Will the GB 100 index continue gaining?
UK economic data were mostly weak lately. The inflation slowed in March as did the GDP growth in the first quarter. However while the UK manufacturing sector expansion slowed in April the activity in the construction sector rebounded in April. The purchasing managers' index for the construction industry rose to 52.5 in April, up from 47.0 in March, a 20-month low. A reading above 50 indicates expansion. And the services sector accelerated expansion in April, though not as much as expected: Markit’s service PMI rose to 52.8 from 51.7 in March. Expansion of activities in construction and services sectors is bullish for GB100.
On the daily chart GB100: D1 is retracing after hitting 15-month low in the end of March. It is above the 200-day moving average MA(200).
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates uptrend: it is tilted higher.
- 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 the bullish momentum will continue after the price breaches above the upper Donchian boundary at 7572.37. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed below the lower Donchian boundary at 7294.31. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (7294.31) without reaching the order (7572.37) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Buy |
| Sell Stop | Above 7572.37 |
| Stop loss | Below 7294.31 |
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