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6900 holds but 6980 6955 support for today | 7000 7020 7078 resistance

FTSE 100 live outlook prediction analysis for 20th May 2021

Bitcoin crashed by as much as 30pc yesterday after China banned financial services firms from providing cryptocurrency services, dragging down other major cryptocurrencies at the same time. It has rebounded after approaching $30,000, a level not seen since January, and well below its April high of $65,000. The downturn quickly infected other cryptocurrencies, with Ethereum sinking by over 36pc and Dogecoin tumbling an even greater 41.5pc.

In the UK, mining stocks dragged down blue-chips on a jittery day for London’s markets sparked by weaker commodity prices and worries over inflation.
Commodities dropped after Chinese authorities suggested a curb on price increases, causing investors to flee their holdings in the sector.  It added to a wider market retreat as inflation concerns continued to infect trader confidence.

The FTSE 100 lost 84.04 points to close at 6,950.20, with just 17 of its 101 constituents ending in the green. The FTSE 250 shed 98.03 points to 22,234.53.

Commodities Swoon

Asian stocks looked set for a mixed open Thursday after U.S. shares dipped and Treasury yields rose in the wake of Federal Reserve minutes that flagged the possibility of a debate on scaling back asset purchases. Futures were steady in Japan and Australia but lower in Hong Kong. Energy and commodities futures swooned, raising doubts about the prospects for a much-vaunted commodity “supercycle.” The benchmark 10-year Treasury yield climbed to 1.67% in U.S. hours and a gauge of the dollar rose.

Sea Defenses

U.S. President Joe Biden said the U.S. must defend open and safe sea lanes in the Arctic and South China Sea as nations including China and Russia seek to assert greater control over the maritime regions. “It’s of vital interest to America’s foreign policy to secure unimpeded flow of global commerce,” Biden said at the Coast Guard Academy in New London, Connecticut, in his first commencement address as president. The Philippines protested China’s unilateral fishing ban in the South China Sea, which runs from May 1 to August 16 and includes areas the Southeast Asian nation has jurisdiction over, the Department of Foreign Affairs said.

Vaccine Winners

New Covid-19 cases in Malaysia have risen to the highest since the pandemic began despite social-distancing curbs, while Taiwan has extended its soft lockdown island-wide. In India, daily deaths have reached a record even as reported infections decline from the highs of early May. Singapore rejected a claim made by New Delhi’s chief minister that a new variant was discovered in the city-state. More than 70% of U.K. adults have received at least one dose of the vaccine and Europe is reopeningfor more travel. Meanwhile, signs are emerging that while all vaccines reduce serious illness and deaths, some are helping the nations that use them exit the pandemic faster than others.[Bloomberg]

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US & Asia Overnight from Bloomberg

Asian stocks were steady Thursday and Treasury yields held an advance as traders weighed Federal Reserve minutes that flagged the possibility of a debate on scaling back asset purchases. Commodities remained under pressure.

Equities edge up in Japan, posted losses in Hong Kong and China, and outperformed in Australia. U.S. futures fluctuated after the S&P 500 pulled back for a third day. The Nasdaq 100 notched a small advance, boosted by late-day gains in tech stocks including Facebook Inc. European contracts were in the green.

The minutes indicated some Fed officials may be open “at some point” to discussing adjustments to the pace of massive bond purchases if the U.S. economy keeps progressing rapidly. The benchmark 10-year Treasury yield was steady after climbing to 1.67%. A dollar gauge trimmed a rally.

Commodities have slid amid concern about inflation, potential curbs on monetary stimulus and China’s efforts to rein in raw material prices. Volatility swept over cryptocurrencies, with Bitcoin posting a same-day plunge and rally of about 30% Wednesday. The sector was more stable Thursday.

Stocks have lost steam in recent sessions on worries about inflation and a Covid-19 resurgence in some countries. Speculative ardor is also waning, underlined most recently by the gyrations in digital tokens. Any hints of a timeline for paring back exceptional stimulus could exacerbate such trends, even though U.S. policy makers have signaled they intend to maintain an accommodative stance for a prolonged period.

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

The bulls fought back from the 6900 level yesterday and we are back knocking on the door of 7000. As a result of the drop the 2 hour chart has initial resistance at the 7020 level and we also have R1 here so we may well see a bit of bearishness here to start with so set up a decent dip and rise day.

The S&P also bounced back well, with the Fed minutes helping to push it back above 4100. 4135 is now the 2h coral line, and the Hull moving average is at 4131 to start with so this is the level that the bulls will need to break for a run higher.

The shorter time frame FTSE charts are bullish, and following a bullish ASX200 session we should see more of a bullish bias today. Initial support from the 25ema at 6980 on the 30m chart so would be good to see any initial dip get defended here, otherwise the 30m coral (now green) at 6950 and coinciding with the daily pivot is the next major support and a level that the bulls will want to defend, otherwise a slide back down to 6900 is likely. 6850 is still the bigger picture support below that.

If the bulls can break above 7020 then a rise towards the 7078 level (R2) looks like it will play out, with a possible retest of the 7100 level. R3 sits at 7140 and just below the 10 day Raff channel top which is 7175 though not expecting that today. If the S&P can push past the 4135 2h resistance level though that should help the bulls across the board.

Gold continues to climb towards the 1900 level but spiked up and fell back yesterday however, the 1860 level with the 200ema and 2h coral here looks like it should be good support for today.

So, watch for the bulls to build on the FTSE rise, with 7120 and 7178 as the main resistance levels, 6980 and 6950 as the main supports. Good luck today.

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