Budget day with more stimulus measures to save the economy | 6180 6212 6251 resistance | 6135 6050 support

Budget day with more stimulus measures to save the economy | 6180 6212 6251 resistance | 6135 6050 support

FTSE 100 live outlook prediction analysis for 8th July 2020

Here’s a quick recap of Tuesday:

  • Stock markets fell as fears sparked by fresh lockdowns and bad economic news prompted profit-taking after strong gains the previous session.
  • European indices slipped after a pessimistic growth forecast by the European Commission which said the eurozone economy will contract by 8.7pc in 2020 due to the coronavirus crisis.
  • Sentiment in Europe and US was also undermined by a bout of late selling in Chinese markets, although Shanghai managed a slightly firmer close.
  • European markets were up to 1.5pc lower at the close, while on Wall Street the Dow Jones index was around 180 points lower by the late New York morning.

London’s benchmark index closed 1.53pc lower today to 6,189.90 while the FTSE 250 ended 1.14pc lower at 17,350.04. European slipped after a pessimistic growth forecast by the European Commission which said the eurozone economy will contract by 8.7pc in 2020 due to the coronavirus crisis. In the eurozone the Frankfurt DAX and Paris CAC fell 0.92pc and 0.74pc respectively.

Up to three quarters of businesses are failing to meet Government guidelines on reopening, sparking fears of a wave of legal claims if staff or customers contract Covid-19 on unsafe premises.  The revelation prompted calls for the Government to make its guidance clearer to avoid firms getting tangled in a web of red tape.  Business groups also called for help for firms to meet the cost of ensuring they minimise the risk of Covid-19 being transmitted between staff and customers.

Dollar Peg Intervention

Some top advisers to President Donald Trump want the U.S. to undermine the Hong Kong dollar’s peg to the U.S. dollar as the administration considers options to punish China for recent moves to chip away at the former British colony’s political freedoms, according to people familiar with the matter. The idea of striking against the Hong Kong dollar peg — perhaps by limiting the ability of Hong Kong banks to buy U.S. dollars — has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo and hasn’t been elevated to the senior levels of the White House, suggesting that it hasn’t gained serious traction yet, according to people who discussed the matter on condition of anonymity. The very idea that undermining the peg has even been raised offers some insight into the range of discussions now underway for punishing China. But the proposal faces strong push back from some in the administration who worry such a move would only hurt Hong Kong banks and the U.S., not China. Meanwhile, here’s why big Wall Street banks’ expansion plans in China could be under threat from new U.S. sanctions relating to Hong Kong’s national security law.[Bloomberg]


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

Asian stocks were mixed Wednesday as concern lingered over the economic impact of the coronavirus. The rally in Chinese shares continued. Stocks slipped in Australia, Japan and South Korea, and edged higher in Hong Kong. The Shanghai Composite Index climbed for a seventh session. Futures on the S&P 500 were little changed after the gauge closed lower, with almost six shares falling for every one that gained. European contracts retreated. Traders brushed off reports that some top advisers in the Trump administration were weighing proposals to undermine Hong Kong’s dollar peg to the greenback.

Here we are nearly back at Fridays support level of 6135 as I write this and if this breaks then we could easily drop another 100 points down to the next main daily support at the 6050 level. We do also have the daily coral line at 6078 which has been green for a while but untested – an overshoot of that and then rise back could well play out. The backdrop is still pretty fearful at the moment despite the Nasdaq making new record highs. I was reading yesterday that 44 UK schools have had to close a “bubble” of the children (15 kids and 2 teachers per bubble) that have returned but its not being reported in the main media. Three pubs that reopened on Saturday had confirmed cases also, and new research suggests that C-19 can spread via airborne particles now too.

The S&P failed to break above the 3190 again, stalling at 3185 as it retraced a bit of the original overnight fall, and looks like a bit more downside is on the cards before another possible push higher. The 3077 area (coincidentally S3 level for today) looks like it may well act as support, or possibly the bottom of the 10 day Raff channel at 3060 currently but rising. A drop to this channel bottom then a bounce back looks like it will play out well. Tallies with the FTSE drop down as well, 6040 channel bottom on that today,

For the FTSE we have initial support at the 6135 level so we may well see an early bounce here to retest yesterdays closing price at 6189, though we have the 30min coral for resistance at 6180 just below this. As such I have a put a short of this possible rally into the play. Should the bulls break above this then the daily pivot and 200ema at 6212 is the next level to watch. The ASX200 had a pretty foul session and we may well see the same, as we also have the budget today with the chancellor expected to give away more with vouchers for home improvements amongst other initiatives. More stimulus for the market but will it like it?

Above 6212 we have 6236 as the key fib level and also the 2 hour resistance with both the coral and the 100 Hull MA here. Another level thats worth shorting should we rally that high.

For the bears, as mentioned below the 6135 level then we may well drop as far as the 6050 level today, hence no initial long at the 6135 level in the plan. However, if you’re feeling brave then it could be worth a go for am double bottom bounce. The US markets do look like they will slide a little bit further though. Nasdaq and tech stocks at the sort of levels they are is a bit crazy at the moment!

So still looking at shorting the rallies for the moment, but a possible bounce at the 6050 area which may have a decent run as its the bottom of the 10 day Raff channel there. Good luck today.

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