Dip and Rise FTSE 100 | 7400 support | Bull Monday Bear Tuesday

20th March 2017

Good morning. I hope you had a good weekend. We had a bit of a bounce on Friday with the bears failing to break below 7400, though the bulls were capped by the double top area around 7444. 7447 is the top of the 10 day Bianca channel for today and if the bulls can break this then X is the next resistance area of note, with X looking stronger still.

Volatility remains low across markets from equities to currencies and fixed-income as investors strive to assess how sustainable the nascent global economic recovery is. The other main bit of news over the weekend is that the Co-op bank is on the ropes, and the BoE are growing increasingly concerned about the future of it as the beleaguered lender struggles to find a rescue buyer. It is understood the Prudential Regulation Authority (PRA) has begun drawing up contingency plans for the troubled bank, which put itself up for sale last month amid mounting concerns about its capital position.

FTSE 100 Outlook and Prediction

Will we get the usual bull Monday bear Tuesday again this week? I expect a fairly flat open mirroring the Asia indices overnight – the ASX200 also had a bit of a dip and rise pattern during their Monday session. Investors will be looking ahead to Tuesdays UK inflation data and the EU PMI figures. The bulls will be keen to push above the previous resistance level of 7447, where we have the recent high and also the 10 day Bianca channel for today, whilst the bears will be looking to push below 7400. That could open up a trip back down to X.

For today I am thinking that the bulls will build on Fridays strength and a third test of the 7445 level will break for a push up to X. The FTSE 100 has remained pretty strong and after a record close on Friday, there will be a fair bit of positive momentum to keep the rise going for a bit longer. Even a back track by the government on the NI increase announced in the budge the other day has really derailed it too much. The shorter time frame charts – 10min and 30min – are both looking for a positive start to the week, and we are in the middle of the Raff channels to start with.

For the bears I am thinking that they might be better off keeping their powder dry for the moment and waiting for X and entering around there. We might start to see the bulls get tired at that level and that could tally with a double top on the S&P at 2400.

So for today I am looking at the X level for support, and X for resistance. I don’t think we will see X today, but maybe later in the week as it looks a fairly key area.