Support 6836, 6827, 6821, 6810 Resistance 6862, 6870, 6885, 6900 – analysis

Good morning. Big day today as we have the UK budget, UK jobs news then the Fed later, which everyone is looking at for clues on when interest rate rises might happen in the US. Does make the analysis a little tricker doing it in advance. They will be looking to see if the word “patient”” is dropped from the statement, if so its a hint that rates will rise sooner rather than later. Bit of a funny session from the FTSE yesterday, Nearly got the 6852 resistance on the initial push but the 6840 resistance area held for a drop to 6800, helped by the Dax selling off. Bounced at 6800 as the Dax hit its 200ema on 30minute at 11930 which pulled the FTSE up to test that 6852, a level that its hovered around ever since. There is a pretty decent 30min channel in play with support at 6836, around the pivot at 6832, and the top at nearly 6900, where we have the top of the 20 day Bianca. The budget should be a little bit generous today as pre-election ones are want to be, so we may see a rise today then a dip tomorrow. Bulls need to break 6862 to push to 6885 and 6900.

US & Asia Overnight from Bloomberg
(Bloomberg) — Asia’s benchmark equities gauge was little changed before a Federal Reserve meeting at which officials will assess the economy and debate the timing of the first U.S. interest-rate increase since 2006.

The MSCI Asia Pacific Index declined less than 0.1 percent to 144.80 as of 9:00 a.m. in Tokyo, ahead of the Fed’s interest rate decision and policy statement due Wednesday. The Fed is likely to remove an assurance from the statement that it will be “patient” before beginning to raise interest rates, opening the door to an increase as early as June, said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd.

“Markets are a bit nervous ahead of the meeting,” Oliver said by phone. “It’s possible that the market will be left none-the-wiser about whether the first rate hike will come in June or September, but we are undoubtedly getting closer.”

Japan’s Topix index added 0.1 percent. Data showed the nation’s exports rose more than economists predicted in February compared with the previous year, while imports unexpectedly declined.

South Korea’s Kospi index advanced 0.1 percent and Australia’s S&P/ASX 200 Index slid 0.4 percent. New Zealand’s NZX 50 Index retreated 0.5 percent.

Almost 90 percent of economists surveyed by Bloomberg predict Fed officials will drop the “patient” pledge from their statement to be released Wednesday. Some 45 percent saw this as a step toward a June increase in rates, which have been held near zero since December 2008, according to the poll of 49 respondents conducted March 12 and 13. Thirty-seven percent saw rates rising in September.

Trader Predictions
Most traders predict an increase by year-end. The odds of a boost by September are 55 percent, futures contracts show, down from 59 on March 6, the date a jobs report showed employers added more workers than forecast to payrolls. There’s a 63 percent chance of a rate increase by October, down from 69 percent on March 6, the data show. [Ref]

FTSE Outlook and Analysis

FTSE 100 Prediction
FTSE 100 Prediction

The initial resistance is 6862 today, which is the overnight high, and a move above this is likely to try for 6870, 6885 and possibly 6900. 6870 and 6900 are the top of the two Bianca channels, whilst 6885 is the top of the 20 day Raff. I have plotted a bit of a bullish day with the bottom of the 30min channel and pivot area holding around the 6835 area. Below this then support is 6821 and 6810. I think a short at the 6885/6900 area could be good too. Its going to be pretty choppy, especially this afternoon when the Fed announcement is made. We also have the divi being applied to FTSE trades today, forecasted to be 9.5 points. I am going to keep it fairly simple I think with the one long and the one short and see how it goes.

35 Comments

  2. Doesn’t look like a day for shorting at the moment (except to snatch a few points here and there). FOMC + divi day = more up imo. Need to wait for the outcome of the FOMC at 6.00pm this evening. There is also a gap on the daily at 6911 from 6th March.

    1. Hi zigzagger, FTSE inching up slowly while DAX and DOW falling. I meant this raise yesterday. No idea when this will drop. Cheers

      1. Trend up today then fall tomorrow I am feeling now. Nice long off the 6836 earlier. Hitting the top of the 20 day Bianca at the moment at 6900

      2. Yes I agree with Nick though depending on what Janet has to say tonight this could at the moment either extend or we could see the drop back after 6pm. Either way we ‘should’ see a 61.8% retrace of today’s high-low range by mid-day tomorrow. I also sense more will-we-won’t-we get to 7000 debates on this board soon! At the moment I’m betting on a double top at 6975-ish to suck everyone in before another pre-election drop.

    1. 6930-40 seems possible today and if it carries on trending then I can’t rule out 6975 by 21.00 (though it does seem a bit ambitious – but stranger things have happened).

    2. Senu, If you draw a line on a daily chart from the FTSE low on 25 June 2013 and line it up with the FTSE low on 16 October 2014. Now draw a parallel line and position it on the FTSE high on 22 May 2013 it matches exactly with our 6975 high on 2 March and shows why we didn’t get to 7000 first time. The more times it knocks on that 6975 ceiling though the more likely it is to break up eventually. I think it may sell off from there on a third hit but if it tries a fourth time it could then break through. The next target after that is potentially 7160. Why 7160? Draw a third parallel line and place it on the high on 15 Oct 2007. These are all hypothetical of course, but if it does get there it should be worth one hell of a short.

  4. What did you mean by this, Nick? “I am going to keep it fairly simple I think with the one long and the one short and see how it goes.”

    2. Nick will no doubt correct me but I believe he posts his actual trade suggestions below the text of his analysis, but you have to subscribe to get this (plus you get it first thing in the morning). I assume he was going long from 6840 and short from 6900. First one was a good suggestion … the second may work out after 6pm …. or not!

      1. I see. I did do a short on 6900 earlier but stop got taken out. It provided only little resistance. The next real resistance will probably come around the area near all time highs, although it might reverse before then.

  7. So guys, am I right in thinking if they are going to raise interest rates in the US will that make the Dow climb as it will draw in investment to the economy? Hence dragging the FTSE with it?

  9. The Dow has just risen 300 points in a matter of minutes from 17700, which has taken FTSE to 7000, but fallen back slightly since. FTSE worth a short here?

      1. What on earth happened on Dow? I could not believe my eyes when I looked at 7 pm after work. Any reason? Thank God I wasn’t in short by then.

          1. Nasty piece of long here. Absolutely no preparation or warning whatsoever. It was going down down down and suddenly up. Dax is pushing down now, I don’t know what’s going on with markets at the moment. It seems lately all these 3 indices are going different directions.

      2. Because I expect 7000 to hold for now. I think the resistance will be too strong for now. The sudden rise on the Dow was a result of the Fed announcement.

        1. 7000 is quite a psychological barrier for the FTSE. I think we will trade below it for the summer but may go through it in the autumn/winter. Summer generally tends to be quite slow for the markets.

  10. Anyone manage to trade the rise on the dow? Surely it can’t keep rising like today’s efforts, Senu?

  11. Newtrader, summer is to long for now. a lot to happen before that. Let us see till what level dow keep raising with this news only. looks like a range breakout from last 7 days.

      1. Found chart EUR/CHF daily chart, looks quite dramatic to me. Gosh, is it possible on indices like FTSE, Dow or Dax? Hope not as such. Today was quite dramatic on Dow as well but comparing to EUR/CHF it’s nothing.

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