Decent bounce but maybe short lived | 7515 7545 resistance | 7460 7435 support | Sell the rallies | FED rates

FTSE 100 live outlook prediction analysis for 29th January 2020

Well we got the rise as expected yesterday with the FTSE climbing steadily. The S&P has managed to close the gap overnight at 3286, and does look set to go a bit higher still ahead of the Fed though rates are expected to remain unchanged. One more leg down will still fit in with a possible drop down to 3200ish before further upside from around there.

European shares regained ground after shedding around 2.5pc on Monday. Main stock markets closed with gains of close to 1pc. Across the pond, the Dow Jones jumped 0.7pc in midday exchanges after US consumer confidence rose by more than expected in January.  The FTSE 100 closed 0.93pc higher at 7,480.69 and the FTSE 250 pushed ahead 0.61% to 21,433.06. However London’s benchmark index has still lost 100 points over the last two sessions amid coronavirus worries.

Contagion Battle

Governments tightened international travel and border crossings with China to try to stop the spread of a coronavirus outbreak that has sickened thousands, and Germany said it had identified a cluster of local patients infected by a woman from Shanghai who had been visiting Europe. The German cases, which are being closely monitored, appear to be one of the first clusters of transmission outside of China. It’s a worrying sign for public health authorities who have taken aggressive steps to contain what for now has been mostly a Chinese outbreak.

China will stop individual travelers to Hong Kong, the city’s Chief Executive Carrie Lam said on Tuesday, while the U.S. and U.K. on Tuesday said that residents should avoid all non-essential travel to China, and United Airlines, the biggest U.S. carrier to the Asian nation, said it would cut flight service after a drop in demand. More than 4,500 people have been infected in China, and at least 125 have died, while $1.5 trillion has been wiped off global stock markets.

Markets Lift

Asian stocks tried to follow U.S. shares and Treasury yields higher, amid efforts to contain the coronavirus and more signs of improvement in the American economy. Futures rose in Japan and Australia. Hong Kong will reopen after a holiday though flights remain limited from China amid an attempt to contain a deadly coronavirus outbreak. The S&P 500 added 1% as technology shares climbed and traders digested positive U.S. consumer confidence and home price data. Apple rose in after-hours trading after its sales forecast topped estimates. Meanwhile, the offshore yuan strengthened and elsewhere, oil rose for the first time in five days, while gold retreated.

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

We have got up to the resistance zone at 7500 on the FTSE and 3290 on the S&P. As such we may well see the bears reappear here. Of course we have the Fed today but they are expected to keep rates unchanged but traders will try and read more into the minutes. For the bears they will want the S&P to stay below the 3294 resistance level as we have R1 and a key fib here. If they manage that then a drop down towards the 2 hour support at 3258 looks like it will play out. We may then see further falls below that depending on the news/sentiment.

For the FTSE 100 there is initial support at the daily pivot and coral line at the 7450 area and the bulls will be keen to defend this to build on yesterday’s rise. After the bullishness yesterday the 2 hour chart has gone positive again, with support at 7434 – should we drop to this area then a long here is also worth a go but again, with a tight stop.

The daily chart has locked into bear mode now and has resistance from the 25ema at 7542 – should we see this area then a drop from here would play out quite well. Bearish early Feb (blamed on Brexit) and then spring higher for a decent close to Q1? Quite possibly.

For today I am looking at the 7450 area too hold any initial drop then a climb into that 7515 resistance level. But I am thinking now that shorting the rallies is the best play for the moment, as long as the S&P doesn’t break through the 3294 level. If it does then the bulls will get back into the driving seat sooner than expected. If we rally to 7515 or possibly 7542 then both these levels looks to be worth shorting.

A break below 7450 will likely see 7434 and if the bears were to break that it gets them back in control for a leg lower, probably down towards 7350 and then a bounce to start around there. That may well tally with the SP dropping off towards 3200 and then bouncing.

So a few bigger picture levels mentioned there. Watching 7515 7542 as resistance, 7450, 7434 and then 7350 as the main supports for today. Good luck today.

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