FTSE 1oo Support 6856 6848 6843 6823 6806 6793
FTSE 1oo Resistance 6874 6883 6886 6910 6989

Good morning. Slow decline to the bottom of the 10 day Bianca channel at 6866 yesterday and a little bit lower to test Wednesdays pre Fed low. Fortunately the earlier long from 6875 managed some points early on with a nice 20 point bounce. The Gold long was a bit slow to get going but at least gained a few. Everyone is cautiously thinking that maybe the leg down has started, but it will be interesting to see what it does at the 6886 and 6910 levels today if it gets that high. If it breaks 6910 for me then we will get another push higher before a bigger leg down.

US & Asia Overnight from Bloomberg

Oil was headed for its biggest weekly jump since March amid speculation major producers will act to freeze output. The dollar pared its loss for the week and Asian stocks extended their retreat from a one-year high.

U.S. crude is back in a bull market and trading above $48 a barrel, less than three weeks after it sank into a bear market. Gold fell for the first time this week as a measure of the greenback’s strength rose from a three-month low, supported by a technical gauge that indicated a turnaround was likely. The yen returned to the weak side of the 100 per dollar level and South Korea’s won slid to this month’s low. The MSCI Asia Pacific Index of shares fell for the fourth time in five days.

Commodities got a boost this week and the dollar tracked lower as minutes of the Federal Reserve’s last policy meeting kept a lid on speculation that U.S. interest rates will be raised in 2016, even as a more hawkish tone was evident in comments made by regional Fed chiefs including New York’s William Dudley. A rate hike has the potential to fuel volatility in financial markets as central banks in Asia and Europe loosen monetary policy in a bid to revive their economies.

“The Fed could potentially move in December, but with uncertainty about U.S. inflation and monetary conditions around the rest of the world, the pace will be extremely measured,” said Roger Bridges, chief global strategist for interest rates and currencies at Nikko Asset Management’s Australian unit in Sydney.

Commodities

The Bloomberg Commodity Index was down 0.3 percent as of 12:53 p.m. Tokyo time, trimming this week’s jump to 2.9 percent.

West Texas Intermediate crude rose 0.2 percent to $48.33 a barrel in New York, after surging almost 16 percent over the last six sessions. Russia indicated this week that it is open to discussing an output freeze after Saudi Arabia’s energy minister said that informal talks among major producers next month may lead to action to stabilize the market. A deal to cap production was proposed in February but a meeting in April ended with no accord.

“The catalyst for this run was the Saudi statement on its preparedness to discuss initiatives to stabilize the price,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “Oil is now getting to an interesting level, approaching the high end of the range. If WTI gets into the low $50s, we may see the current momentum start to sag a bit.”

Gold fell 0.4 percent, paring its weekly advance to 0.8 percent.

Currencies

The Bloomberg Dollar Spot Index rose 0.3 percent, trimming this week’s loss to 1 percent. While the U.S. central bank’s minutes showed Wednesday that officials were split on the need for an interest-rate hike in July, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an interest-rate hike. The probability of a borrowing costs being raised this year stands at 47 percent, Fed funds futures show.The yen weakened 0.4 percent to 100.27 per dollar, paring its weekly gain to 1 percent. The currency has strengthened 20 percent this year and Japan’s Vice Finance Minister Masatsugu Asakawa said on Thursday that policy makers are prepared to take action if moves are being driven by speculative trading.

The won dropped 1.1 percent , headed for a 1.4 percent weekly loss.

The rupiah was little changed at 13,129 versus the greenback. Five out of nine economists surveyed by Bloomberg forecast Indonesia’s central bank will lower its benchmark interest rate to 6.25 percent from 6.5 percent at a Friday policy review. Four forecast no change.

Stocks

The MSCI Asia Pacific Index fell 0.2 percent and has lost 0.6 percent since reaching a one-year high at the end of last week. Japan’s Topix index gained 0.3 percent, set for a weekly loss of 2.2 percent, and Hong Kong’s Hang Seng Index was down 0.3 percent after ending the last session at its highest since October.

S&P 500 Index futures fell less than 0.1 percent after the U.S. benchmark advanced 0.2 percent in the last session to close just shy of an all-time high. [Bloomberg]

FTSE 100 Outlook and Prediction

I am still thinking that shorting the rallies is the best play for the moment. I started that on Tuesday, but unfortunately the bounces haven’t really been strong enough to reach the ideal short entries. However, on the 2 hour chart we now have resistance at 6886 and 6910 so both those levels look worth a go for a run to test the recent low at 6848. If we break 6848 then we will most likely see 6800. We also have the 200ema on the 30min chart at 6882 as resistance with a generally bearish looking 30min chart to start things off today.

If the bulls were to break through 6910 (they will be helped by the fact that we are sitting at the bottom of the 10 day Raff channel here at 6855) then we may well be on for one last push up towards 7000 early next week. However, in the past couple of weeks the media has got pretty excited about rises and we all know that you need to do the opposite to that! We have some option expiry action at 10:10 this morning as well so may see a little bit of chop around then.