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

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

FTSE 100 live outlook prediction analysis for 7th January 2020

Stock markets across Europe spent most of the day deep in the red, with the FTSE 100 posting 1pc losses and Germany’s blue-chip DAX falling almost 2pc.  Virtually all of London’s blue-chip companies were down at midday with only BP and Shell, gold miner Polymetal and weapons manufacturer BAE Systems notching meaningful gains, amid escalating US-Iran tensions.

The FTSE 100 closed the day 0.62pc lower.

Gold prices hit a seven-year high as traders fled to safe havens after the Iran crisis deepened following the assassination of commander Qassim Soleimani. The precious metal climbed to $1,585 an ounce, its highest level since April 2013, while oil rose above $70 a barrel for the first time since the September rocket attacks on Saudi Aramco facilities. Gold has slipped back overnight though to retest the $1,555 support level.

Calls for Calm

Rising tensions between the U.S. and Iran have prompted global calls for calm. As the U.S. ordered additional forces to the Middle East and President Donald Trump vowed the Islamic Republic will “never have a nuclear weapon” — without sharing details on how he plans to ensure that — UN Secretary-General Antonio Guterres urged all sides to exercise restraint, while EU leaders scrambled to come up with a response to the crisis as mourners packed the streets of Tehran. But just days after the shock U.S. killing of an Iranian general, calm has returned to global markets and investors are in wait-and-see mode, eyeing pressure points like rising oil prices and falling cyclical shares before changing their allocation strategies.“The question will be about how long this tension is sustained,” said Neil Dwane, a global strategist at Allianz, which oversees 557 billion euros ($623 billion).

Markets Open

Asian stocks rebounded and U.S. futures edged up as investors dialed back concerns about a further deterioration in the security situation in the Middle East.

Treasuries and the yen held losses from Monday, when demand for havens ebbed in the New York trading session. While bellicose rhetoric continues in the wake of the U.S. killing of a top Iranian military leader, expectations for improved growth and earnings offer support for risk assets. Equity benchmarks rose more than 1% in Tokyo and Sydney, and advanced in Seoul and Hong Kong. Shanghai saw more modest gains. Asian currencies climbed, with the yuan hitting a five-month high. Oil extended losses.

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

The markets proved quite resilient yesterday and after the initial drop off the 7595 resistance level to test a low at 7525, the bulls fought back and we have recaptured 7600 overnight. The US bulls also managed to get a steady rise going on the S&P with the bottom of the Raff channels holding at 3210. That has now changed the charts to a more positive picture, with 2 hour supports on the FTSE showing at 7576 and on the S&P at 3234. The Dax is a little bit more subdued as data is weighing on that, with the latest car production figures dropping to a 23 year low on waning exports.

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

More often than not we get a mid January sell off and it looks like we may well push a bit higher for that to then kick in, rather than selling off early January. As such, we may well get a rise towards the top of the 10 day Raff channel today at 7666, and also possibly the 7686 resistance level. Above that the bulls will be keen to defend the 7600 level this morning having brought it up, but there slightly lower supports at the 7570/80 area look like they might see a test. There are a cluster of 30min supports here, namely the daily pivot and the coral, and also just below the 200ema which is now sitting at 7589.

If the bulls defend the 7570 level then we should see some more upside today, in a mirror of the ASX200, which saw a steady grind higher today, If the bears were to break below 7570 then a drop down to the 7512 fib level looks like the next play, and also a test of the 25ema at 7503. If we were to see this area then a long here is worth a go, and could have a decent target area up at 7700+ ultimately. I don’t think we will dip that low today but you never know!

So for today looking for a rise to the 7666 and 7686 levels whereupon we may well then see a turn lower (which may well tally with a nice double top on the S&P at 3265. Looking at 7575 and then 7503 as the main supports for the FTSE today.

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  1. Eurozone inflation in Dec. jumped to 1.3pct, the core rate since November, which may embolden some of the hawks on the European Central Bank governing council

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