Virus continues to spread | Pound rises | 7529 7485 support | 7575 7621 resistance

Virus continues to spread | Pound rises | 7529 7485 support | 7575 7621 resistance

FTSE 100 live outlook prediction analysis for 23rd January 2020

The FTSE 100 dipped amid refreshed global nerves over trade, and a rise in the pound sparked by better-than-expected economic data. The FTSE 250 ended the day flat, with gains and losses evenly spread across London’s mid-cap firms. The FTSE 100 closed down 0.51pc to 7,571.92 while the domestically-focused FTSE 250 managed to edge up 0.08pc to 21,762.98.

Manufacturers have reported the biggest surge in confidence on record in a fresh sign that a “Boris bounce” is sweeping the economy. The sharp rebound lifted hopes of a recovery in factories – but new orders still plunged at their fastest pace since the financial crisis in the three months to January, according to a survey by the Confederation of British Industry (CBI). Its confidence gauge – the difference between businesses reporting higher rather than lower optimism – surged  to a net balance of +23pc in January, up from -44pc three months earlier.

There is now a roughly 50pc possibility of an interest rate cut from the Bank of England this month, but the probability was roughly 70pc recently.

Asian Stocks

Asian stocks resumed declines, with Chinese shares bearing the brunt of losses amid ongoing efforts to control the widening coronavirus outbreak. The yen strengthened and Treasuries ticked higher.

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

The bulls failed to reach the 2hr coral yesterday at 7649, instead we got the drop off starting just below at 7639 (slightly annoying as just shy of my order) and there is some more definite looking bearishness starting across the board. The S&P has dipped below the 3320 level so a drop down to 3300 looks likely on that, with 3250 below that where we have the bottom of the Raff channels. On the FTSE, the pounds strength yesterday weighed on the index, and we are back testing the 7550 level that we bounced from on Tuesday.

As such, we may well see a bit of a rise again from this level, towards the 7575 resistance level where we have the 30min coral and also the daily pivot at 7583. We should then see the bears appear here if they are to maintain the momentum, for a run down towards the 7529 support level. Should the bulls break above the 7583 level then a test of the 2 hour coral at the 7625 area looks likely. The bulls will obviously be keen to keep buying the dips but we have got the move below the 25ema on the daily chart now, after three days of testing it. As such, I am thinking that we drop down to the bottom of the Raff channels, both of which are around the 7480 area. As an aside, the 200ema on the daily is at 7382 currently and a level to bear in mind for the next few sessions.

If the bears break below the 7529 level then S2 at 7501 looks likely to be tested and being a round number may well see a reaction, though as mentioned 7480 is just below this for the Raff channels. I imagine the bulls will try and defend S1 though as we also have a key fib here at 7529 so a long here is worth a go this morning, if we dip past 7550.

So, looking a bit more bearish now, watching 7550, 7529, 7500, 7480 as the main supports. For resistance 7575, 7625 are the rain levels showing.

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