Stocks slide, Sterling soars as UK prepares for snap election call

Fare Market Expectations, Stock Market Outlook

This article was last updated on April 16, 2022

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Stock markets overseas had already been falling overnight on their return to trading from the Easter holiday weekend when surprise UK election news added gasoline to the flames of political uncertainty. ‎The escalating war of words over North Korea with US VP Pence visiting East Asia,  and the close 4 way race in France ahead of Sunday’s first round of Presidential election voting. The CAC is trading down 1.4% compared with a 0.7% decline for the Dax. US index futures are down 0.25% as they start to give back Monday’s 0.9% gains.

Today, UK PM May ‎announced that she plans to table a bill tomorrow to call for a snap election to be held on June 8. Labour has indicated they would support the call. The government is hoping through the election to strengthen their mandate heading into Brexit talks, and to test the suport of those who oppose the plan. On the news, Sterling is soaring indicating traders favour the move, while the FTSE has dropped 1.3% due to the currency rally.

Crude oil is down again today, ‎falling 0.7% in a continuing trading correction with rising US supply getting the blame for the pullback. Falling oil has been dragging on oil sensitive currencies like CAD and NOK. Oil may remain active through tonight’s API and tomorrow’s DOE inventory reports.

Earnings season is in full swing this morning. So far this morning reports have been mostly positive with Johnson & Johnson, Bank of America, Comerica Bank and Harley-Davidson all beating the street but Goldman Sachs coming in short of expectations. Later today results are due from Goldman Sachs, IBM, Rogers Communications, d Yahoo!

Economic reports due today include existing home sales for Canada plus industrial production, housing starts and building permits for the US.

Chart Signals: GBP breakouts, UK 100 completes a head and shoulders top

With an election call coming, UK markets have been in focus today with GBP breaking out against USD and EUR today. On the flip side, UK 100 has completed a head and shoulders top while other major indices also look like they are coming under distribution. The US Dollar Index has slipped under 100.00 today.

North American and European Indices

US 30 remains under distribution. Monday’s rally was not enough to retake the 50-day average near 20,665 and the index has started to decline again. Meanwhile, RSI still stuck below 50 confirms current downward momentum and a falling channel. Next potential support near 20,270 a 23% retracement of the previous advance.

US SPX 500 continues to trend back downward, with resistance falling toward the 50-day average near 2,356 and a descending triangle forming above 2,325 with next support after that at the 23% retracement level near 2,312 then 2,300. RSI trending lower and falling under 50 confirms momentum turning increasingly downward.

US NDAQ 100 is holding support at its 50-day average near 5,345 for now but looks vulnerable with the index stuck under 5,400 and the RSI trending down toward 50. Next potential support on a breakdown possible near 5,300 then 5,265 a 23% retracement of the post-election rally.

UK 100 is breaking down today, taking out the 7,260 neckline of a head and shoulders top to complete the bearish pattern and falling to test 7,200. Next potential support near 7,150 a Fibonacci level, then 7,100. RSI falling away from 50 confirms momentum downturn. 

Germany 30 increasingly looks under distribution with 12,165 a former breakout point and support level becoming resistance an uptrend support line having been broken and a bearish descending triangle forming above 12,000. RSI breaking under 50 confirms momentum turning downward. Next potential support near 11,835.


Gold is consolidating recent gains and working off an overbought RSI trading near $1,285, holding above $1,275 Fibonacci support but stuck below $1,300 round number resistance.

Crude Oil WTI is rolling down from a classic rounded top trading back under $53.00 with resistance falling toward $52.70, the pair trading near $52.20 and next potential support near $51.10 the 50-day average. RSI falling back toward 50 confirms upward momentum weakening.


US Dollar Index is breaking down today, sliding back under the 100.00 round number. Resistance falls toward 100.20 with next support tests possible near 99.75, 99.35 then 99.00. RSI has already broken and retested 50 to confirm momentum turning downward.

USDJPY remains in a downtrend with a Fibonacci cluster in the 109.00 to 109.25 area containing rebound attempts and the pair trading near 108.80 and its 200-day average while working off an oversold RSI. Next downside support possible near 108.15 its recent hammer low. 

EURUSD is climbing within its $1.0580 to $1.0680 trading range testing the top with next potential resistance near $1.0720 a Fibonacci level, then $1.0775. RSI peeking back above 50 suggests momentum turning upward.

EURGBP is breaking down today! The pair has taken out 0.8460 Fibonacci support that may become resistance and continued down toward 0.8430 with next potential support near 0.8400 then 0.8340 near its December low. Falling RSI confirms downward momentum accelerating.

GBPUSD is in rally mode today, blasting up off of $1.2500 through $1.2600, then clearing its 200-day average near $1.2620 on its way toward a bit test of resistance near $1.2690 a 23% Fibonacci retracement of the post-Brexit selloff and the neckline of a big head and shoulders base. RSI above 50 and rising confirms upward momentum increasing. Next potential resistance near $1.2830 then $1.2900.

USDCAD is turning back upward today with the pair regaining $1.3300 and advancing on $1.3350 while the RSI has regained 50 to confirm the upturn. Next potential resistance appears in the $1.3400 to $1.3450 zone.

CADUSD is breaking down today falling back under the $0.7500 round number and taking out an uptrend line. RSI slipping back under 50 confirms momentum turning back downward with next potential support near $0.7485.

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