Coronavirus vaccine | 7395 7366 support | 7452 7503 resistance | gold support 1550

Coronavirus vaccine | 7395 7366 support | 7452 7503 resistance | gold support 1550

FTSE 100 live outlook prediction analysis for 5th February 2020

The pan-European benchmark STOXX 600 ended the day up 1.6pc, while the FTSE 100 slightly trailed its blue-chip peers in the face of a rising pound. Sterling went on an adventure, dropping in early trading as markets remained pessimistic over the UK’s approach to looming crunch trade talks with the European Union, after both sides set out their stalls on Monday.

After hitting its lowest level so far this year, the pound began to recover about an hour after traders reached their desks in London, gaining momentum after a better-than-expected activity reading for Britain’s construction sector cast further doubt over the likelihood of a rate cut in the near future.

Markets Up

The rally in risk assets was set to gather pace Wednesday with stock futures in Asia climbing following a strong session for U.S. equities. Treasuries sank amid speculation the global economy can weather the impact of the coronavirus. The S&P 500 Index soared the most since August, up 1.5%, and futures in Japan, Hong Kong and Australia all pointed higher, indicating a second day of strength for Asian shares. The Nasdaq 100 hit an all-time high, with U.S. technology stocks now having recovered all the losses sustained in the recent virus-related sell-off. European and emerging market equities also rallied, while the offshore yuan advanced. Haven assets from Treasuries to the yen and gold all retreated and elsewhere, West Texas crude oil closed below $50 a barrel for the first time in a year amid concern the coronavirus will crimp demand.

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

The bulls continued to push on yesterday and we saw the FTSE100 hit 7440 last night. That coincided with gold dropping throughout the day, down to test the bottom of the 10 day Raff channel at 1551. We have seen that hold overnight and a small climb on gold. Ergo, we may see a bit of index weakness creep in today, ahead of the NFP number on Friday. That said, the bulls will be keen to defend the 7400 level now they have recaptured that. If they do defend then a rise towards 7450 looks possible this morning where we have the key fib level for today. Above this I am still thinking that we will see a test of the 25ema on the daily, which is at 7485 currently, and possibly the 7503 daily resistance above that. The top of the 20 day Raff is at 7555 as well.

If the bears were to appear today then a break of 7400 is likely to lead to 7350 or just below where we have S1 and the key fib support. Below this (and probably worth shorting a break of 7345) we have 7320 for the next fib level and also a possible drop down to S2 at 7270. That said, I do think that the 7350 level will see a bit of a defence should we go that low.

The S&P stuck its nose above 3300 yesterday but has dropped back again overnight. The 2 hour chart after these rises looks bullish of course, and has decent looking support at 3256 and 3268 – as such, if we were to drop then I would expect a bounce around these areas. Its now at the top of the 10 day Raff channel, hence the stall at 3007, and that has moved down to 3000 now, so the bears will be keen to make sure that it drops a bit from there. A break out of the 10d channel will likely see a push higher and we are heading back to all time highs (ATH) though.

With the FTSE100 stalling overnight at the 7440 level the 30min chart looks bearish to start with this morning, so we may well get an initial dip down to start with, if the bears defend the 25ema which is at 7416.

With gold at the bottom of the 10d Raff, FTSE and SP at the top of theirs then technically it makes sense for a bounce in gold and a drop in indices but we shall see.

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