Support 6619 6617 6600 6590 6575 Resistance 6659 6670 6712 6782

Good morning. Nice early drop from the 6612 yesterday for a few points before the rally back towards the 6620/30 area as the Fed announcement got nearer. September 2015 is still being mooted as the likely rate rise time, so we shall see. I think ti might even be later in the year. We have just popped above the 10 day Bianca channel at 6619 so I expect this area to be back tested today, and as we also have the daily pivot there, for it to act as support for a push higher, certainly this morning. Things feel like they are recovering from the lows on Monday, helped by the UK GDP coming in at 0.7% yesterday for the second quarter.

US & Asia Overnight from Bloomberg
Asian stocks rose, following gains in global shares, as profits topped estimates and the Federal Reserve said the U.S. economy was progressing toward an interest-rate increase.

The MSCI Asia Pacific Index climbed 0.2 percent to 141.04 as of 9:01 a.m. in Tokyo. While Fed policy makers said the labor market and housing had improved, they didn’t provide a clear signal on the timing for rate increases, in a statement issued after their meeting. Economists had put the chance of a September increase at 50 percent.

Equities in the U.S. and Europe climbed as earnings from Bayer AG to General Dynamics Corp. topped expectations. Facebook Inc. declined in extended trading. Nomura Holdings Inc. rose 3 percent in Tokyo after first-quarter profit more than tripled as surging brokerage commissions and investment-banking fees outweighed a drop in trading income. Daiwa Securities Group Inc. advanced 3.3 percent after also posting a larger-than-anticipated earnings increase.

“Nothing has really changed with the Fed’s stance,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., said by phone. “Earnings have been reasonable and there have been some bright spots. We expect to see a fairly good gain today” in equity markets, he said.

Japan’s Topix index advanced 0.8 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent and New Zealand’s NZX 50 Index rose 0.2 percent. South Korea’s Kospi index added 0.2 percent. Markets in China are yet to open.

China Futures
Futures on the Hang Seng China Enterprises Index, a gauge of Chinese stocks listed in Hong Kong, and contracts on the Hang Seng Index gained 0.6 percent. FTSE China A50 Index futures were little changed and contracts on the Shanghai Shenzhen CSI 300 Index climbed 2 percent in recent trading.

The Federal Open Market Committee described job gains as “solid,” and it dropped the modifier “somewhat” to describe a decline in labor-market slack. At the same time, policy makers refrained from signaling the probable timing of the first rate increase since 2006, keeping market expectations focused on a move as soon as September.

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The underlying gauge gained 0.7 percent on Wednesday. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I have a fairly simple plan for today and that is to buy the dip to around the pivot area and plan for 6659 and 6670 or more. If the pivot area breaks then the next support is the 200ema on the 30min at 6600, with 6590 and 6575 below that. Resistance wise, there is a pretty decent 30min channel in play with resistance at 6670+ (depending on when it hits the top of the channel), along with daily chart resistance from the 25ema at the 6659 level. However, the S&P reversed it bearish EMAs pretty easily earlier in the week so it will be interesting to see if the FTSE does the same thing; if it breaks that 25 ema then 6715 looks a likely point it will rise too quite quickly. So, bullish for the moment.

50 Comments

  1. Morning chaps.
    Had a good think about my shorts overnight, decided to keep selling in 10 pt increments up to 6700 and put the stop on it all at 6765. It’s budgeted for and in a box now.

    This morning looks like 6620/30 resistance has turned into support, so pretty much agreeing with Nick, although mildly bearish (and short) right now until we get above 58.

    1. Still trialling that lack of reaction engulfing candle theory, so stopped that short out for pennies.

      1. Just to jinx it, showing all the signs of a trend up day.
        Sharp 3 min uptrend requires 20+ points an hour which is unlikely to be sustainable, its behaviour when that breaks will be interesting.

  4. Morning All
    RSI Trio Here 6678/ 79 – would be the ideal entry (S)
    Not had alot of these lately

    1. Hard to sell into a grinding move like this Hugh, but a 3 min close <75 might confirm a chink in the armour.

      1. There’s a definitely technique to using the RSI as an entry point.
        Putting the order just a fraction below the second to last candle before the signal seems to make a difference. A close of that candle would be better – but then you kind of feel it’s too late !

  7. Hi guys,

    Still my long @6600, shorted @55 this morning, closed @35, added another long @48, stop on both longs now @48, my thoughts are we will rise today with a sell tomorrow and bull Monday again, my target for the rise before the next leg down was 6730 but I’m starting to wonder if that will be the case

  9. Let’s see what it does here ..
    Small retracement to 78 maybe …
    or straight breach of 73.5

  10. tmfp
    Whilst this is doing it’s thing..
    Re your earlier post…
    Although we’re someway away from it – 6765 seems a less than perfect place to put a stop as it approaches the cycle top of 6814.
    To my mind 6765 would perhaps be the area to start getting twitchy to Short with a stop at 6814 on a daily view.
    Just my pennies worth……

    1. Fair enough, there are a number of elements in the placement of the stop, which is essentially 6720 with some wriggle room.
      Drift up days like this don’t really change my view, I’m treating it as a good selling opportunity.
      You can view this rise an approach to a test of previous bounce highs or a dead cat that will run out of steam (great mixed metaphor) very soon. My view is obviously the latter.

  11. Hi guys,

    Although the macd on the 5min is about to turn red, I think its only taking a breather, I think shorts today will be hard work, just my thoughts.

    1. Hi Pete – I’d agree with you ..this looks like a continuation pattern.
      R2 6685 & R3 6736 . The Cam trade has been good lately…

  12. So, a 50 point grind up from the lows, a 10 pt correction, now resumed to +65.
    It’s purely a home grown rally, DAX not interested.

    Time for a noon top pick, short at 88, 10 pt stop.

  13. Hi Hugh,

    I’m not to well up on cam’s, I just work of the candles & mcad, as I said earlier I thought 6730 would hold this retrace as I think the market has peaked in the long term, but I’m starting to wonder, the only thing is next month most pro traders will be going on holidays and generally the market drops in August, it will be interesting to see how Monday goes as its the 1st day of the new month.

  14. Gd one tmfp, still holding my longs, 70 area possible could be another long entry, see what happens

      1. Yea tmfp went short @73 came out +5, now long @68, see what happens, its going to blow one way or the other

      1. Trying to be too clever there, silly end to a good day.
        Had it all didn’t it? A grind up, sell offs, the lot.
        Important close for the DOW tonight I reckon, <17650 will not be good but 17750+ could keep the momentum going in the morning.

        Cheers.

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