German June Ifo confidence unexpectedly jumped to record high of 115.1 from 114.6 in the previous month. The current conditions indicator rose to 124.1 from 123.3 and the future expectations index to 106.8 from 106.5. Sideways move was anticipated after mixed PMI readings last week, and the data were much better. The diffusion index showed that manufacturing confidence improved only marginally, while construction confidence fell back slightly, but that this was more than compensated for by the sharp improvement in the wholesale index to 23.6 from 20.3 and a rise in the retail sales index to 16.0 from 11.4. Strong numbers then that suggest the German recovery remains on track, as the rest of the Eurozone catches up.
The UK100 is up 0.57% following stronger than expected Ifo readings. Since morning however, European stock markets were moving higher led by a more than 1% rise in the Italian MIB, after the government stepped in to support troubled Veneto banks. The fact that are moving higher, indicates also that investor sentiment is improving as oil prices pick up from recent lows and WTI futures rise further above USD 43 per barrel.
Hence the strength of UK100 prompted a Long position on Friday’s close and on the possible Morning star formation in the Daily chart. But, the day has not ended hence Morning star has not been finalized yet and we cannot rely on that signal. However, the long position was taken by considering the last strong Bullish candle in the 4-hour chart, while today’s strength has breached and broken the 20-period and 50-period MA in the 4-hour chart, which will potentially attract more buyers. An entry was taken at 7467.8 with target 1 7500, which is also the 20 Day moving average. Target 2 is 7540 which is the 14 Day ATR.
The Parabolic SAR remains negative in the Daily chart, and turned positive in the 4-hour chart. In the 4-hour chart, the RSI is neutral, while in Stochastic signal line is at 71 and it crossed above slower MA line.
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