FTSE 100 live outlook prediction analysis for 27th January 2020
That rise to 7640 on Friday looked pretty crazy at the time and did in fact turn out to be fake. It was a shame that it rose through the 7590 resistance but the 7630 level proved more of a stumbling block as we then dropped to 7540. That made the rise look like a stop hunt to squeeze the shorters from Thursday that would have gone in at 7520. However the FTSE 100 still closed positive for Fridays session. Since that though the FTSE 100 futures have dropped through 7500, while the S&P futures have tested the 3252 support area – the question now is if it holds that and we get a climb back up. The virus fears are still weighing on the markets.
European stocks bounced back as investors shrugged off fears over the spread of a deadly coronavirus from China, while economic data beat expectations. The Continent’s bourses jumped during the session, clawing back much of the week’s losses but stumbling just before the close.
The FTSE 100 closed up 1pc, handed an extra boost by a rise in the dollar that put pressure on sterling. Nearly all the blue-chip index’s constituents posted gains, as it clocked up its best one-day gain since the relief rally directly after the general election. Trading was strong from the starting bell, with investors enthusiastically buying back into continental shares after the latest activity gauge for Germany’s private sector came in above analysts’ expectations, pointing to a continued comeback for Europe’s largest economy.
The chances of an interest rate cut fell on Friday after a closely-watched survey showed the economy has swung back into growth mode following last month’s landslide Conservative election win. Traders reined in expectations of an interest rate cut at the Bank of England next week on hopes that a downturn in the run-up to the election has come to an end and a “Boris bounce” has taken hold. IHS Markit’s purchasing managers’ index (PMI) showed that private sector activity grew in January for the first time in five months. The PMI rose to 52.4 in January, its highest level for more than a year, in an unexpectedly strong recovery from 49.3 the previous month. Any score above 50 signals growth.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The S&P has finally tested the 3250 support area overnight (futures hit 3252 to be exact) after the drop from 3340, and the FTSE has tested the 7500 level once again. For today the bottom of the 10 day Raff channel has moved slightly lower to 7480 from 7498 on Friday and as such we may well drop down a smidge lower today before a rise kicks in. The bulls will be keen to defend this area ahead of the Fed on Wednesday and the UK’s departure from the EU on Friday. Brexit day finally upon us!
If the bears were to break below the S2 level of 7472 though then a drop down towards the 7406 S3 may well happen, and we also have the 200ema on the daily at 7365. If we were to drop that low this week then I really wouldn’t be surprised to see a rise from there though. That said, I am expecting the 7470/7480 level to hold today, and we get a rise back above 7500 towards the 7575 resistance level. That would tie in with the SP holding this 3250 area where we have the bottom the 20 day Raff channel. Talking of the S&P, its gapped down below the 10 day Raff channel, so a rise to back test that at 3285 will likely play out today. If the bulls can keep the momentum then they will be keen for a push past that.
For the FTSE bulls, there is initial resistance from the 25ema 30min at 7529 and they will need to break this to push towards that 7575 cluster of resistance levels. With the 30min coral, 200ema and daily pivot here then the bears may well be trying again at this level, but if the S&P puts in a decent bounce from this support area it may well carry the FTSE and other indices with it.
Should they break above 7575 then 7624 is the fib level of note for today and the next upside target, then Fridays high at 7640, though that might be a bit of a tall order for today. The 2 hour chart has gone bearish again now with resistance at 7544 for the moment, and this may well prevent a straight line rise to 7575, so bear this level in mind too.
Gold is now testing the top of the 10 day Raff channel at 1584 so a pull back on that to test the 25ema on the daily around the 1546 area before another push higher looks like it will play out.
So looking at 7529, 7544, 7575 as the main FTSE100 resistance levels, with 7480, 7470, 7410 as the main supports. And expecting a bounce from 3250/3260 on the S&P.
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