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BOE rate increase – buy the rumour sell the news

By FTSEDayTrader Limited (Nick Hilsden)Market Overview2 hours ago (Nov 03, 2022 07:32)

Todays it’s the BOE’s turn with another rate increase expected and a rise to 3%. Despite the increases so far inflation isn’t being tamed (nor will it be while raw material costs continue to increase). How much further will they have to go? Target (NYSE:TGT) is probably still around the 5% mark. 

For today we may well see an initial climb from this 7100 level which we are at as I wrote this in another case of buy the rumour sell the news. A 75bps rate increase is of course already known and priced in, so once again focus is once again on the accompanying rhetoric. 

Initial resistance is at the 7130 level where we have the daily pivot and the 30m red coral line. As such we could see any early bounce falter here. Above this then the bulls will be looking to take this to the 7172 R1 level, and ideally back towards 7200. 7222 remains the daily level of note that the bulls need to break to continue the push higher and this ties in with the 200ema on the daily at 7239. Could be a big ask to break it on the first attempt.

For the bears then they will be looking to break the 7100 level – to do so would likely see the key fib at 7080 tested in fairly short order, with 7054 S1 below that. We are then also getting near to the daily 25ema at 7044 currently – and a possible swing long area. Keeping a close eye on this support level as a bounce from here would fit pretty well and tee up a rise towards the 7222 level. The Fed’s decision to put up rates by 0.75 percentage points piles pressure on Andrew Bailey, the Governor of the Bank, to follow suit with a rise of the same scale in the UK. A 0.75-point increase would take the Bank’s interest rate back to levels last reached in November 2008. 

It would mark the Bank’s eighth consecutive rate rise, and its largest since policymakers scrambled to protect the pound on Black Wednesday in 1992.

I am also watching the Dax40 to hold the 13100 level where we have the key fib. If it manages to do so then a rise towards the daily pivot at 13200 looks possible, and possibly even 13300 where we have the other key fib resistance this time. 

The daily charts across the board remain bullish and we are just testing the bottom of the 10d channels on the Dax40 and S&P500. The FTSE100 10d channel ties in with the S1 and 25ema daily levels. Ergo it would be good to see that hold today. 

So keep an eye on the midday news re rates today. Good luck. 

BOE rate increase – buy the rumour sell the news

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