Bulls need to defend 7200 now if we are to get towards 7300 | 7241 7263 resistance | 7198 7170 support

Bulls need to defend 7200 now if we are to get towards 7300 | 7241 7263 resistance | 7198 7170 support

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

Markets are betting on the Bank of England making a severe policy error where it is forced to reverse interest rate rises after stamping out an inflation surge. Investors are bracing for a string of interest rate rises to about 1.2pc by the end of next year before the Bank begins cutting borrowing costs again in 2023.  The move on UK rates markets predicts the Bank will have to reverse course after hurting the economy by increasing interest borrowing costs too quickly over inflation fears.

An Asia-Pacific stock gauge rose for a second day Wednesday, tracking a U.S. climb as corporate earnings helped to improve investor sentiment. Treasury yields advanced and the dollar dipped.

A rally in Chinese technology firms such as Alibaba Group Holding Ltd. bolstered Hong Kong shares on hopes the worst of Beijing’s regulatory crackdown is over. Equities fluctuated in China, where the central bank boosted short-term liquidity, held loan prime rates steady and set a weaker-than-expected yuan reference rate in a sign of discomfort over currency strength.

The earnings season has taken some of the spotlight away from concerns about a slowing pandemic recovery, price pressures stoked by energy costs and reduced central bank support. The Cboe Volatility Index, a measure of implied equity swings for the S&P 500, has fallen back to the lowest level since August.

FTSE 100 live outlook prediction analysis for 20th October 2021

A fairly flat day for the FTSE100 yesterday hovering around the 7200 area. The bulls are hanging in there for the moment but the 2h chart remains bearish with 7242 resistance for today to start with. The S&P finally managed that 4525 resistance level at the end of the session and we have seen a modest reaction there so far, which could suggest that we may get a bit more of a dip today. The 4480 level is the green 2h coral so a drop down to there before another bounce would fit well.

Initial support for the FTSE100 is at the daily pivot and green 30m coral at 7214, with 7200 below, and if we can see a defence of that then we should get a rise towards the 7260 level where we have the daily resistance and the key fib level. Above the 7262 level then the bulls may well be able to push for R3 at 7278, and then the round number at 7300 above that. Feels a bit of a big ask to push on and some cooling of the recent US rise would make sense first. It all does remain positive though and with earnings season underway that may well provide the catalyst for further upside.

The news flow remains fairly pessimistic though they seem to be fixated on heat pumps in the British media at the moment. Lots of rhetoric to comply with Agenda 2030 at the moment ahead of COP26. They have also tested the waters about rate rises, though inflation is only transitory!

Just going back to the S&P, if we do get a larger pullback then it could drop down to the 25ema on the daily at the 4425 level currently (and rising) as we haven’t had a test of that since it went bullish, so that is a level to keep an eye on in the short term.

Below the 7215 level then 7202 is the 200ema on the 30m and that line has held for the last 2 bounces, albeit modest ones. The coincides with S1 at 7198 as well for today so we may see a third test hold, though a break lower will likely see a slide down to the 7160 level where we have S3 and daily support. Below that 7155 is the bottom of the 10d Raff and a level that I would like to see hold, as a break of that might upset the bulls applecart and a further slide back to 7070 may well play out. A lot will depend on the US over the next few sessions and if the S&P can break the 4525 area to push to new ATHs.

So, FTSE100 is a bit directionless really but I am mostly expecting a rise and dip to play out today, as long at the 7200 level holds. 7265 is decent resistance though so should we get there then I think we will see the bears appear here.  Good luck today.

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