Dip and rise for a bull Monday with 7474 7444 7414 key supports | 7514 7535 7550 key resistance

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

A strong afternoon session on Friday helped the FTSE 100 climb into the green to end a broadly positive first week of trading in 2022, closing 0.5pc higher at 7,485.

Stocks in Asia traded cautiously Monday as investors brace for bond-market volatility and stimulus withdrawal. The dollar rose.

Shares in Hong Kong advanced as technology stocks rebounded. They fell in South Korea, while China edged higher. U.S. futures fluctuated after the S&P 500 posted the worst start to a year since 2016 as expectations of faster-than-anticipated U.S. interest-rate increases roiled bond markets and sparked a rotation out of high-growth equities. Japan is shut for a holiday Monday. European futures gained.

Treasury futures extend losses after posting the biggest one-week decline since February 2021. Australia’s 10-year bonds tumbled. Treasury yieldsclimbed across the board last week in a selloff sparked by Federal Reserve minutes signaling a willingness to start hiking rates as soon as March. Cash Treasuries won’t trade in Asia because of the Japan holiday.

U.S. inflation data this week will be keenly watched as concerns grow the Fed is behind the curve in tackling elevated price pressures. U.S. employers added fewer staff than expected in December, but wages rose more than forecast, boosting the Fed’s case to tighten liquidity.

FTSE 100 live outlook prediction analysis for 10th January 2022

Despite the slightly weaker S&P500 the FTSE100 bulls are hanging in there and fought back well on Friday. The 7495 resistance level held but futures look like they are going to pop through the 7500 level and we will get a retest of the 7535 recent high today. The first stumbling block though is the R1 and key fib level at 7516 that we may well see an initial dip off this morning.

Above 7516 then 7535 is the next key level though we may well get a decent bull Monday today and a pop through this today would likely see a rise towards the 7550 level where we have the top of the 10 day Raff channel and a level that I would like to see tested (and rejected for some bearish points!). Both the Raff channels are again heading up now though so if the bulls in the USA put in a good performance we should see further upside on the FTSE100 as well. That may well tie in with a push towards the 7600 level.

The seasonality seems to be playing out well at the moment which is traditionally bull till mid month and then a bit of weakness kicking in then.

For the bears, they will be looking to break the 2 hour support ay 7482 – and we also have the 30min support here with the daily pivot and green coral. As such this level looks quite key to start with and 7474 is the green 2 hour coral as well. Overnight low is also at this level so I would like to see this hold otherwise a slide down to the 7444 S1 level and 7414 key fib below that are the next levels of note.

So today a lot will depend on the US and it’s all eyes on the bulls to see if they can push past the 4715 area which as capped the recent rises. They will need to break above the 4730 level though as we have the red 2h coral here and with the Hull MAs bearish they really need a strong close. Any weakness and particularly a break of the 4660 level will likely see a slide down to the 4600 area.

For the Dax, the 2h chart remains bearish and key resistance on that at 16075 and 16119 so these two levels look key, along with the key fib resistance at 16074, and support at 15871. I would like to see any dip down to this latter level get defended for a push up towards that 2h resistance. As with the FTSE100, both the Raff channels are heading up which bodes well for the bulls to continue to buy the dips. For the moment anyway!

The Raff channels on the S&P500 are not quite so rosy with the 10day heading down at the moment and the 20 day heading up. Longer term bullish, shorter term bearish! With the bottom of the 20 day channel at 4613 any dip down to this area will likely see a stout defence.

So for the FTSE100 looking at a possible dip and rise today with the bulls keen (needing!) to defend the 4775 area strongly on any dip. The bulls need to break 7535 to see 7550+. Possibly a bull Monday to play out.

Good luck today.

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