Blue-chip shares in the UK finished lower overnight as the sterling touched 12-year lows, causing weakness in the banks.

The FTSE 100 gave up 121 points (-2.2%), finishing at 5500.

Despite the weakness in the banks it was actually the mining sector that was the biggest drag, wiping 23 index points off the FTSE.

The weakness was brought about by weaker gold and metals prices. Ferrexpo, Kazakhmys, Rio Tinto and BHP were all weaker.  

The oilers also endured, with BG Group letting go of 6.4%, BP down 1.1%, and Shell 0.9% weaker.

Looking ahead, we are due to receive the Halifax house price index data tonight at 6.00pm AEST, and the BoE official rate statement at 9.00pm AEST. The offical rate is widely expected to remain unchanged.

The FTSE is continuing to show weakness with with some periods of short-term strength.

Tonight we are looking to take advantage of this, with orders to get short on a retracement to the 5540 level.

The key moving averages look to be rolling over ,and could cross to the downside in the near future; the MACD is also showing weakness.

We can also see resistance within the 5520 and 5565 zone around  today’s Gravitation and R1 levels.

Therefore, in accordance with the ASR Capital Management Model, we would look to sell one (1) FTSE 100 cash mini at 5540 limit.

This would see our stops placed 45 points above our entry price at 5585.  Our target is at 5460, which is 80 points below entry.

The trade will use approximately $350 worth of equity.

This entry order is valid until 6:00am Friday morning, Melbourne time.

As usual, we will not be risking more than $200 on this trade at our stops.

ASR will track this trade as a Report Support trade – with all important information regarding the trade to be conveyed within the major report updates.

We will only track this trade if the above criteria are met, but members may enter according to their own discretion based upon the above analysis.