Dip and rise with new month money | 7454 7485 7522 resistance | 7367 7353 7316 support

Dip and rise with new month money | 7454 7485 7522 resistance | 7367 7353 7316 support

FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

London’s top indices finished in the green Friday, marking their strongest monthly performance of 2022, as a jump in commodities and a slew of upbeat earnings reports outweighed economic slowdown worries. The FTSE 100 gained 1.1pc while the FTSE 250 climbed 1.6pc, both holding at seven-week highs.

Inflation in the eurozone has soared to a new record high, piling more pressure on the European Central Bank as price rises show no signs of slowing. Consumer prices rose 0.7pc in July, leaving them 8.9pc higher than a year before, according to Eurostat. Energy costs are the biggest driver of inflation, up 39.7pc in a year, but  food and services prices also continued to pick up.

Most Asian stocks rose Monday, weathering risks from China as well as a drop in US equity futures amid a reminder from Federal Reserve officials that interest rates need to go up to quell elevated inflation.

An Asia-Pacific share index added 0.5%, led by Japan. S&P 500, Nasdaq 100 and European contracts were in the red. The mixed picture follows the best month for global equities since 2020, which helped pare their drop this year to 15%.

Recent developments underlined the economic challenges facing China, including shrinking property sales and a contraction in factory activity that highlighted the cost of Beijing’s preference for mobility curbs to tackle Covid. The parlous backdrop may stoke speculation that more stimulus is needed.

Meanwhile, Fed Bank of Minneapolis President Neel Kashkari saidSunday the US central bank is committed to reaching its long-term inflation goal of 2%. Before that, Fed Bank of Atlanta President Raphael Bostic said the monetary authority has further to go in raising borrowing costs.

China’s official measure of factory activity contracted in July as fresh virus flare-ups weighed on demand, and the Caixin PMI also missed forecasts.

South Korean activity weakened for the first time in two years, while Japan expanded at the slowest pace in 10 months. read more  That did not bode well for the raft of other PMIs due this week, including the influential U.S. ISM survey, while the July payrolls report on Friday should also show a further slowdown.

At the same time U.S. data out Friday showed stubbornly high inflation and wages growth, while central banks in the UK, Australia and India are all expected to hike again this week.

“We expect the Band of England to step up monetary tightening with a 50bp hike at its August meeting. The increase in energy prices is likely to be the main driver,” warned analysts at Barclays.

S&P 500 futures and Nasdaq futures both eased 0.3%. EUROSTOXX 50 futures added 0.1%, while FTSE futures fell by the same amount.

While U.S. corporate earnings have mostly beaten lowered forecasts, analysts at BofA cautioned that only 60% of the consumer discretionary sector had reported and it was under the most pressure given inflation concerns for consumers.

FTSE100 live outlook prediction analysis for 1st August 2022

A decent showing from the bulls on Friday that may roll into today as well, and as per then, buying the dip looks to be the preferred play. The news focus will now move onto the BoE and the 50bps rate increase that is likely looming. Start of the new month today as well, which may well help the bulls initially, with a new month money kick up.

Initial resistance is at the daily pivot at the 7419 level and just below that daily resistance level of 7425. On Friday we saw the bulls break above this to get the 7450 level, and that does bode well for more upside past 7500 soon, despite dropping back since. Above the 7454 key fib level then the R2 7522 level is the next key one really, though we do have R1 at 7485 but I wouldn’t be surprised to see the bulls break above this today.

The bears will be looking at the initial drop to go down towards the 7350 level with the key fib here and the 30m 200ema at 7363. That is also just bellow the 2h coral at 7374 currently.

The daily chart remains bullish and the EMA support is down at 7286 currently – if we were to drop down and test that this week then a swing long off this line is worth a go. Obviously it will move slightly higher as the week progresses so keep any eye on that general area.

The 7400 level is the 2h support to start with as well, and we have climbed off that overnight. It’s not the cleanest support though, as its not the first test of it since it went bullish, hence why the bounce so far form there is a bit lacklustre.

I am thinking that the FTSE100 will likely follow the ASX200 today and have a dip and rise play out.  The Raff channels continue to head up and we are still tracking the middle point of both of them as you can see on the daily chart – a slow steady move up playing out really at the moment rather than getting into extremes either way.

S&P500
Again, this looks bullish for the short term and a rise towards 4200 distinctly possible now. 4180 is the 200ema on the daily, while 4080 is decent 2h support for today. I have gone for the long on the trade plan as again I think that buying the dip, especially at the start of the new month, is the better play for this today. The bulls have managed to break out upwards and still hold the upper hand for the moment. Below 4080 though and then 4030 is the next key support area with the 30m 200ema here, and also aligning with S3 today. The 2h coral is also there so should it get this low then a long here is also worth a go.

Above the 4154 level is what the bulls will be aiming for – so keep an eye on 4180 and 4200.

Good luck today.

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