US sells off from 4600 but 4440 support | 7500 7487 7466 7420 support | 7550 7580 7616 resistance

US sells off from 4600 but 4440 support | 7500 7487 7466 7420 support | 7550 7580 7616 resistance

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

The FTSE 100 slipped yesterday from the 7636 resistance level on weakness in oil stocks and GlaxoSmithKline. The blue-chip index ended 0.1pc lower at 7,585, weighed down by oil majors Royal Dutch Shell and BP as they tracked weaker crude oil prices.

GSK shed 1.8pc and was among the top big-cap losers after Unilever effectively ended its acquisition plans by announcing it wouldn’t increase its £50bn bid.

Meanwhile, U.S. equity futures fell along with Asian stocks Friday and bonds rallied as shaky company earnings and the prospect of tighter Federal Reserve monetary policy buffeted sentiment. The S&P recoiled sharply from the 4600 level and has dropped 150 points since.

Nasdaq 100 and European contracts fell over 1%, as did MSCI Inc.’s Asia-Pacific equity index. Demand for havens pushed the 10-year U.S. Treasury yield below 1.80% and made the yen the top performer in the Group-of-10 currency basket.

An unnerving, late-session Wall Street reversal Thursday wiped out the day’s gains before marooning the tech-heavy Nasdaq 100 in a correction. The S&P 500 also turned lower and is now more than 5% off its January high. The tremors come as investors get to grips with the prospect of tighter Federal Reserve policy to quell high inflation.

Investors are grappling with the prospect of reduced stimulus in the Fed’s effort to quell high inflation. Company developments also soured the mood, with Netflix Inc. plunging on a disappointing subscriber outlook. A report that Washington is allowing some Baltic states to send U.S.-made weapons to Ukraine stoked concerns about a standoff with Russia.

Oil was lower on a surprise climb in U.S. crude stockpiles. The White House also said it can work to accelerate the release of strategic reserves.

China Risks

The Biden administration is monitoring real-time data obtained from businesses operating in China to determine whether outbreaks of omicron pose a risk to U.S. supply chains. Meanwhile, China continues with its attempts to eradicate Covid, this time widening a testing blitz on international mail entering the country, which it suspects is bringing the virus with it. Another Covid-Zero holdout, Western Australia, has delayed its Feb. 5 reopening on fears that a wave of omicron could cause “a flood of disease,” while things are heading in the opposite direction in Thailand, which plans to welcome back tourists without the need to quarantine.

Crypto Crackdown

Russia proposed banning crypto mining and trading, with the central bank citing dangers posed to the country’s financial system and environment. Digital currencies bear the hallmarks of a pyramid scheme and undermine the sovereignty of monetary policy, it said. Meanwhile, in the U.S. the Fed took a key step toward the possible issuance of a digital currency by soliciting feedback through a discussion paper on a government-backed coin, known as a CBDC.

FTSE 100 live outlook prediction analysis for 21st January 2022

Well the bears grabbed their chance yesterday as worries mount. The S&P failed to break above the 4600 level where we had the red 2h coral, though I wasn’t expecting a 150 point drop from there I must admit! The FTSE100 has actually held up pretty well considering, holding around the 7500 level as the US slid. Despite that the 2h chart has gone bearish as you would expect with the 7580 Hull moving average as initial resistance with a red coral at 7588 above that. Should we get a rise to these areas then a short here is worth a go.

Of course expect the unexpected today for a freaky Friday anyway! It will be interesting to see if the bulls can defend the 7500 level to start with though a move below this will likely lead to a test ope S1 at 7467. 7503 is initial daily support as well.

Below the 7467 level then the bears will likely get a turbo boost to take it down to 7420 which is the next key level – with 7401 S2 below that. That said I wouldn’t be surprised to see it hang on today and actually rise towards the 7580!

If the bulls were to break above 7588 though then 7628 is the next daily resistance level of note, and just above R1 at 7616. Seems a big ask to get back above 7600 today though in light of the US weakness. Things are also ramping up again with USA/Ukraine/Russia too which isn’t helping. Is the covid stock boom fizzling out?

The S&P500 tested the 4440 level overnight and this looks pretty key for the moment and crucial support. If the bears were to break this then we will likely drop to the 4408 200ema on the daily, but then it looks really bearish for quite a significant slide. Of hope for the bulls are that some bears are calling for a 50% market correction from here – once the headlines get a bit crazy we are usually near a decent support!

They will be keen to defend any second test of the 4440 level today anyway, and I am expecting a bit of a rise on the S&P towards the 4500 – 4515 area as there is a decent cluster of resistance there – namely the pivot and 30m coral, and also the 2h Hull MA. Ahead of the weekend we may well be a bit cautious though and not see too many bulls piling in later on today.

So, keep your guard up today, as its Friday it can pay to take a bit of risk off with lower stakes. watch 7503 7467 for support with 7421 below that. 7550, 7580 and 7628 for resistance. Have a great weekend and good luck today.

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