FTSE 100 outlook prediction analysis for 25th November 2019
It was a happy end to the week for the FTSE 100, which managed to wipe away losses for the month so far after solid gains on Friday. The blue-chip index just scraped over a strong performance in August to have its best showing since the end of July. A lot of that was of course at the expense of the pound, which found itself battered from two directions as PMI data rolled in. The Bulls managed to regain the 7300 level and hold onto it for the rest of the day, setting up the 7200 as the low for the moment and a continuation of the bull run.
UK activity gauges showed that crucial services sector slowed in November, while the manufacturing decline continued. It was the worst reading for services since after referendum in 2016. Companies pinned the slowdown on Brexit uncertainty and the forthcoming General Election.
China said it will raise penalties on violations of intellectual property rights in an attempt to address one of the sticking points in trade talks with the U.S. The country will also look into lowering the threshold for criminal punishment for those who steal IP, according to guidelines issued by the government on Sunday. The U.S. wants China to commit to cracking down on IP theft and stop forcing U.S. companies to hand over their commercial secrets as a condition of doing business there.
Stocks in Asia were set for a mixed start to the trading week as investors monitored the latest on U.S.-China trade. Currencies saw muted moves in early trading. Futures edged up on equities in Japan and Australia, while Hong Kong contracts ticked lower. The pound advanced, reversing some of its decline from Friday. The S&P 500 nudged up Friday after President Donald Trump said he was “very close” to a trade pact with China. On the docket this week: Federal Reserve Chairman Jerome Powell speaks on Monday, U.S. consumer spending data is due Wednesday, and the U.S. celebrates Thanksgiving on Thursday, when equity and bond markets will be shut. In Asia, Alibaba starts trading in Hong Kong on Tuesday, and the Bank of Korea sets policy on Friday.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Global stocks are on course to round out a third month of gains, though a mixed picture on trade last week capped sentiment and left bond yields making a further move lower. The 10-year benchmark U.S. yield has steadied around 1.77%, down from the three-month high of 1.97% touched in early November.
The bulls have built on Friday’s move and managed to get the futures up to the 7350 level. To start with today we have resistance at the 7362 level with a key fib here to start the day, and as such we may well see a bit of an initial drop before more upside later as a possible bull Monday kicks in. There is a gap at 7340 which is likely to close initially, along with the closing price last week at 7326. However, with the bull on Friday the 2 hour and daily charts have gone bullish and have got decent support showing. The daily 25ema is at the 7306 level, while the Hull moving averages on the 2 hour is rising and currently at 7268. If that continues to rise today it may well coincide with the 7300 level later on and as such a long at this area looks to be worth a go. The big question is if the 7180 level is the low for now. As you know I was expecting a drop down but I was thinking the 7100 level looked more likely, but maybe the bulls put up a stronger fight and 7180 is it.
All that said, I would still like to the see the S&P drop down to test the 25ema, which is currently at 3074. It’s regained 3120 overnight and refuses to get too bearish, defending the 3100 level on Friday. If it does start to go then we should see the FTSE retrace a bit down to the daily supports. 7294 previous resistance, in theory(!), should now also become support.
If the bulls break the 7356 level to start with then we should get a test of the R1 and 10 day Raff channel top at 7375. If we do then I would like a short here, as I think we may well see some initial profit taking from the 7200 longs here, and also a drop back down to the supports would make sense for a push higher towards the end of the year. The 10 day Raff channel has been working quite well so far during Q3 and Q4 and hopefully that continues!
Above the 7375 level then 7416 looks possible and the FTSE 100 looks pretty bullish still. Focus will be onto the election soon, with the MSM being quite bullish over the weekend and estimating that the FTSE is lagging other global indices by 20% due to Brexit uncertainty. If the election delivers a Tory majority, the deal is then more likely to pass through parliament, and that uncertainty may diminish, with the associated uplift in the FTSE 100. 500 point rally anyone to close out 2019…? Who knows!
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