Bear gaining some strength | 7197 7140 support | 7240 7270 7295 resistance | Trade deal phase 1

Bulls fight back as Middle East worries shaken off | 7570 7503 support | 7666 7686 resistance

FTSE 100 outlook prediction analysis for 21st November 2019

Global stocks slipped yesterday after revived concerns for a China-US trade deal. President Donald Trump threatened higher tariffs on Chinese goods should a mini trade pact with Beijing fall through but told reporters at the White House that Washington was continuing to talk to Beijing and that “they want a deal”.

The US Senate also passed legislation supporting protesters in Hong Kong…. Most investors now fear it could significantly impair negotiations and the signing of a ‘phase-one’ deal with Beijing.

Elsewhere, there were a slew of notable individual results on a rough day for global markets, with the FTSE 100 the worst faller in the West. Kingfisher, which owns brands including B&Q and Screwfix, was the biggest faller on the FTSE 100, dropping 14.8p to 194p after the company missed analysts’ expectations for sales in the third quarter, with falls across much of its operations. Education group Pearson fell 25.2p to 642p, after analysts at Goldman Sachs and Redburn both warned the company was likely to face increased pressure from competitors. Sage Group fell 22p to 720p after the IT company took a profit hit in line with expectations. Citi analysts said the results were mixed.

Over to Trump

The U.S. Congress overwhelmingly voted to send a bill supporting Hong Kong protesters to President Donald Trump, setting up a confrontation with China that could imperil a long-awaited trade deal between the world’s two largest economies. The bill, approved unanimously by the Senate Tuesday, passed the House 417-1 and could go to Trump as soon as Thursday to be vetoed or signed into law. The bill would require annual reviews of Hong Kong’s special status under U.S. law and sanction officials deemed responsible for human rights abuses and undermining the city’s autonomy. Trump is expected to sign the bill, according to a person familiar with the matter.

Cautious Markets

Stocks in Asia looked set for a cautious start after a report that Washington and Beijing will be unable to agree on a trade deal this year dragged U.S. equities and Treasury yields lower. The yen edged higher after the U.S. Congress passed legislation supporting Hong Kong protesters. Futures on share indexes in Hong Kong and Australia slipped, with Japanese contracts flat. The S&P 500 Index fell 0.4% after Reuters said that a pact may be delayed, though the index pared losses following a report that progress is being made.

FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

Well that got quite bearish yesterday with the drop down to the 7215 area which is now looking like a fairly key support area and has held again overnight. For today we have the key fib at 7205 and S1 at 7197 so we may well see a bounce here if we get an opening drop. It does feel like the bears are back in the game now, and helped by the more negative news flow yesterday. I am still thinking that the S&P needs to drop down to test the daily support level, now at 3067, and that will bring the FTSE down a bit further. 7100 maybe…. before a bounce at the end of the year.

FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

The bottom of the Raff channels for the moment are at 7182 for the 20 day and 7133 for the 10 day so I wouldn’t be surprised if we drop down for the end of November to test the bottom of these before a bounce, though maybe a bit lower than where they currently are.

With the fall yesterday the 2 hour chart has gone bearish and is showing good resistance at the 7282 to 7302 area and as such I am liking this area for a short. Of course the bulls will have to get it up there for that to happen and as long at the 7200 area holds this morning then that may well be possible. The news flow regarding the trade deal will probably do another one eighty and be positive about a deal today!

If the bulls were to break the 7302 level then a rise towards the 7360 area would be next up, but with the drop off 7430 we now have a bearish daily chart. The moving average resistance is at 7299 for now and I would expect that to lead to drop down further on the FTSE, if it gets tested. As I said I’m expecting a move lower before a year end bounce and that would all tie in with that nicely.

Cable is holding around the 12900 area and if that pushed higher then a drop on the FTSE would result. Thats probably treading water while the pre election, and then election result, pans out.

If the bears were to break below the 7197 level then I am looking at 7140 as the next support area, and also those Raff channels mentioned. S3 for today is down at 7090 but I am not expecting it to get that bearish. The ASX200 had a dip and rise day, and initially I am thinking that we get similar. We are just testing the 30min coral as I write this at 7234 which may well act as initial resistance for an opening move lower before the bulls defend the 7200 area.

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  1. US, China on ‘doorstep’ of trade war deal, but ‘phase one’ tariff removal holding up talks, sources say via

    – However, Chinese sources warned that if Trump signed the act, Beijing would be expected to react.

  2. – Philadelphia Fed Business Conditions November 10.4 (Consensus 7.0) Vs October 5.6
    – Prices Paid Index November 7.8 Vs October 16.8
    – New Orders Index November 8.4 Vs October 26.2
    – Employment Index November 21.5 Vs October 32.9

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