Bull Monday kicks in early | 6292 6330 6378 resistance | 6205 6142 support | L shaped recovery

Bull Monday kicks in early | 6292 6330 6378 resistance | 6205 6142 support | L shaped recovery

FTSE 100 live outlook prediction analysis for 6th July 2020

Friday recap:

  • PMI data for Britain’s services sector showed a decline in the private sector may have bottomed out. The gauge came in just below the month-no-month ‘no change’ mark, suggesting the slowdown may have reached its nadir. Some experts have argued it is too pessimistic, and that output has likely been bouncing back since April.
  • It was a similar story for Europe’s PMI readings, although France appears to have clearly returned to growth.
  • In China, the services sector recorded its best monthly crisis in a decade – demonstrating the continued bounceback in the world’s second-largest economy. Stock closed at five-year highs.
  • European shares dropped, ending a four-day streak of gains.
  • In corporate news, Land Securities said it would resume its dividend payouts, Rank said it will reopen some Mecca Bingo halls from tomorrow, and Rolls-Royce confirmed it is looking at ways to raise cash.
  • Elsewhere, the UK won a bidding war for satellite firm OneWeb, with its takeover offer now subject to regulatory approval.

Economic Crisis

Hopes for a V-shaped global economic rebound are fading. The world economy is entering the second half of 2020 still deeply weighed down by the coronavirus pandemic with a full recovery now ruled-out for this year and even a 2021 comeback dependent on a lot going right. Central banks and governments have injected trillions of dollars of unprecedented support into the world economy, and some gauges of manufacturing and retail sales in major economies are showing improvement. But the reopening of businesses looks shaky at best and job losses risk turning from temporary to permanent. Much depends on the spread of the coronavirus, a vaccine for which remains out of grasp. The IMF estimates that by the end of this year 170 countries — or almost 90% of the world — will have lower per capita income. Back in January, it predicted 160 countries would end the year with bigger economies and positive per capita income growth.

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

Asian stocks rose along with U.S. and European futures as investors weighed expectations for ongoing policy support against increasing global coronavirus cases. The dollar and Treasuries dipped. Shares in Shanghai surged more than 4% on strong volume, amid positive commentary on the market from state media. Benchmarks in Tokyo, Hong Kong and Seoul were also higher. U.S. equity futures climbed with markets due to reopen after a holiday. Australian shares underperformed as authorities ramped up efforts to control outbreaks in Melbourne. The WHO reported a one-day high in global infections over the weekend with cases crossing 11.3 million. Oil retreated.

We broke below the 6200 level on Friday, however the lower support at 6135 held well for a decent rally to end the week. We managed to climb all the way back to R1 this morning at 6249 and have seen a small reaction so far here. I am expecting a bull Monday, as the US returns from their Independence Day holiday as well. The bulls need to defend the daily pivot and 30min coral line at 6192 though in order to push higher today. If they can clear that R1 level at 6249 then we should see a rise towards the daily resistance level at 6292.

The S&P has initial resistance from R3 at 3180 to start with today after its steady rise since Friday and the bulls will need to break that to test the 3190 resistance level which is just above. 3205 is the top of the 10 day Raff channel as well so there is a possible short around this area. That may well coincide with the FTSE hitting that 6290 area as well.

If the bulls break above the 6292 level then 6321 is R2 and the next key level that the bears will try and defend. We may well see a stutter here so I have also put a short here as 6330 is also daily resistance.

If the bears break below the 6192 level then 6142 is the key fib level that is the next support area, and just above Fridays low (6136). S1 is just below that at 6120 though will it be that bearish on a Monday with lockdown easing and things starting to move again economically? There is certainly potential for the S&P to push on towards the pre-Covid highs with an aggressively rising 10 day channel at the moment and if they can break above 3230 it may well pan out for a bullish summer season.

So, watch 6250, 6292, 6330 as the main resistance levels for today, with 6192, 6142 6120 as the supports. Good luck today and expect a bull Monday as we rise towards the key resistance levels.

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