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7440 7400 7388 support | Fed on Friday | 7510 7545 resistance | Gas rises higher (ironic!)

#1 · 24th August 2022, 10:56 am

Quote from Nick on 24th August 2022, 10:56 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 250 has hit a fresh one-month low as a looming gas crisis in Europe and news of slower-than-expected business activity growth exacerbated fears of recession, while a stronger pound weighed on the FTSE 100. The mid-cap index closed down 1pc, marking a third consecutive day of decline, as soaring UK gas prices fueled fears of surging inflation that has restrained the economy. The FTSE 100 shed 0.6pc.
Europe faces a bleak recession, economists have warned, after the eurozone’s German engine room reported a sharp slump in activity. Business activity across Europe shrank this month according to the purchasing managers’ index (PMI), a closely watched survey by S&P Global.
The index fell from 49.9 in July to 49.2 in August. Any score of below 50 indicates falling activity, so this shows an accelerating decline in the eurozone.
Germany’s manufacturing heartlands are leading the decline. The country’s overall PMI dropped to 47.6, showing the sharpest contraction in more than two years. The French economy has also edged into negative territory at 49.8, led by a plunge in factory activity.
Britain also suffered its slowest growth in 18 months, while the world’s largest economy stands on the brink of a downturn too as bottlenecks, inflation and rising interest rates drain demand in the US.
Asian stock markets slipped for an eighth straight session on Wednesday, and the dollar loomed large as fresh hawkish comments from a Federal Reserve official kept investors cautious ahead of this week’s Jackson Hole symposium.
Minneapolis Federal Reserve Bank President Neel Kashkari was the latest official to reiterate the Fed’s focus on controlling inflation ahead of all else, and said on Tuesday his biggest fear was underestimating the extent of price pressures.
MSCI’s index of Asian shares outside Japan fell 0.2% in morning trade, on track for the index’s eight successive daily drop, if sustained. Japan’s Nikkei fell 0.6%.
Wall Street steadied overnight after two days of heavy losses, as soft U.S. data tempered rate-hike worries. The data also eased pressure on short-dated U.S. Treasuries.
U.S. services and manufacturing surveys had disappointed on Tuesday and July new home sales fell to a 6-1/2 year low.
S&P 500 futures fell 0.3% in Asia and European and FTSE futures also eased a bit. Brent crude futures are hovering around $100 a barrel on signs of U.S. demand and Saudi Arabia’s talk of supply cuts. The higher oil price helped prop up energy stocks in Australia.
The euro, which made a brief trip above parity on Tuesday, was struggling at $0.9950 as markets see soaring energy prices setting off another round of inflationary pressure that will take a bite off growth. It had hit a 20-year low of $0.9901 on Tuesday.
Bleak Picture
Economic activity weakened from the US to Europe and Asia, reinforcing concerns that soaring prices and the war in Ukraine will tip the world into a recession. US business activity contracted for a second-straight month in August, falling to the weakest level since May 2020, while output in the 19-nation euro zone fell as record energy and food inflation saps demand. In Asia Japanese output shrank, Australia’s services sector contracted and China is dealing with the twin blows of a real estate crisis and a Covid Zero policy which is damaging the economy. Australia is also contending with slumping house prices — they’re down 5% in Sydney in just three months — adding to the risk of recession.
Waiting for the Fed
Stocks look set for a steady open amid fresh questions about how aggressively the Federal Reserve can continue raising interest rates in the campaign against high inflation. Equity futures rose for Japan, Australia and Hong Kong, while US contracts fluctuated after small losses for the S&P 500 and Nasdaq 100. Weakening economic activity complicates the Fed’s task of tightening monetary settings to curb price pressures and may stir expectations of less aggressive hikes.
FTSE100 live outlook prediction analysis for 24th August 2022
The bears managed to take it down to the next support below 7490 yesterday and we had a modest bounce from the 7470 level. Next up is the 74440 support level and if the bears have another go today we may well see that. However, I am thinking that we are more likely to have a rise towards the 7512 200ema line (initially at least), and possibly test the 7531 R1 level - we also have the red 2h coral in this area so a rise to here then a drop off would make sense.
Low volume choppy August action continues still, and we are approaching the Fed Jackson Hole symposium on Friday. As such traders are looking for clues as to how aggressively they can keep rising rates in light of weakening economic conditions. Probably best to avoid driving the nail into a recession! Energy costs are the main thing that needs to be controlled now - that in turn will lower inflation. Slowing economic demand via increased rates isn't really appropriate!
If the bulls were to push above the 7530 area then 7545 is the key fib then R2 at 7569 - once again aligning with that 7570 area that we dropped off on Friday. Above that then 7600 still beckons as a round number but I am not expecting us to get that high today.
The bears could possibly break 7440 though, especially if the S&P500 goes for the 4104 key fib support level. That will weigh on other markets. On the bulls side though is the fact that the ASX200 rose today, helped by commodity stocks, and that may well be the case for the FTSE100 as well.
If they do break 7440 then 7388 is S3 and probably worth looking out for. It's worth nothing though that the daily 25ema support (usually a good swing entry line) is at 7447 - so again this lends weight to support in this area.
So, not too much more to say, we may well have a bit of bull today, especially if the 7470 continues to be defended in the short term, and a rise towards the 7530 level would be good today.
Good luck!
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If you would like more detailed analysis for FTSE100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The FTSE 250 has hit a fresh one-month low as a looming gas crisis in Europe and news of slower-than-expected business activity growth exacerbated fears of recession, while a stronger pound weighed on the FTSE 100. The mid-cap index closed down 1pc, marking a third consecutive day of decline, as soaring UK gas prices fueled fears of surging inflation that has restrained the economy. The FTSE 100 shed 0.6pc.

Europe faces a bleak recession, economists have warned, after the eurozone’s German engine room reported a sharp slump in activity. Business activity across Europe shrank this month according to the purchasing managers’ index (PMI), a closely watched survey by S&P Global.

The index fell from 49.9 in July to 49.2 in August. Any score of below 50 indicates falling activity, so this shows an accelerating decline in the eurozone.

Germany’s manufacturing heartlands are leading the decline. The country’s overall PMI dropped to 47.6, showing the sharpest contraction in more than two years. The French economy has also edged into negative territory at 49.8, led by a plunge in factory activity.

Britain also suffered its slowest growth in 18 months, while the world’s largest economy stands on the brink of a downturn too as bottlenecks, inflation and rising interest rates drain demand in the US.

Asian stock markets slipped for an eighth straight session on Wednesday, and the dollar loomed large as fresh hawkish comments from a Federal Reserve official kept investors cautious ahead of this week’s Jackson Hole symposium.

Minneapolis Federal Reserve Bank President Neel Kashkari was the latest official to reiterate the Fed’s focus on controlling inflation ahead of all else, and said on Tuesday his biggest fear was underestimating the extent of price pressures.

MSCI’s index of Asian shares outside Japan fell 0.2% in morning trade, on track for the index’s eight successive daily drop, if sustained. Japan’s Nikkei fell 0.6%.

Wall Street steadied overnight after two days of heavy losses, as soft U.S. data tempered rate-hike worries. The data also eased pressure on short-dated U.S. Treasuries.

U.S. services and manufacturing surveys had disappointed on Tuesday and July new home sales fell to a 6-1/2 year low.

S&P 500 futures fell 0.3% in Asia and European and FTSE futures also eased a bit. Brent crude futures are hovering around $100 a barrel on signs of U.S. demand and Saudi Arabia’s talk of supply cuts. The higher oil price helped prop up energy stocks in Australia.

The euro, which made a brief trip above parity on Tuesday, was struggling at $0.9950 as markets see soaring energy prices setting off another round of inflationary pressure that will take a bite off growth. It had hit a 20-year low of $0.9901 on Tuesday.

Bleak Picture
Economic activity weakened from the US to Europe and Asia, reinforcing concerns that soaring prices and the war in Ukraine will tip the world into a recession. US business activity contracted for a second-straight month in August, falling to the weakest level since May 2020, while output in the 19-nation euro zone fell as record energy and food inflation saps demand. In Asia Japanese output shrank, Australia’s services sector contracted and China is dealing with the twin blows of a real estate crisis and a Covid Zero policy which is damaging the economy. Australia is also contending with slumping house prices — they’re down 5% in Sydney in just three months — adding to the risk of recession.

Waiting for the Fed
Stocks look set for a steady open amid fresh questions about how aggressively the Federal Reserve can continue raising interest rates in the campaign against high inflation. Equity futures rose for Japan, Australia and Hong Kong, while US contracts fluctuated after small losses for the S&P 500 and Nasdaq 100. Weakening economic activity complicates the Fed’s task of tightening monetary settings to curb price pressures and may stir expectations of less aggressive hikes.

FTSE100 live outlook prediction analysis for 24th August 2022

The bears managed to take it down to the next support below 7490 yesterday and we had a modest bounce from the 7470 level. Next up is the 74440 support level and if the bears have another go today we may well see that. However, I am thinking that we are more likely to have a rise towards the 7512 200ema line (initially at least), and possibly test the 7531 R1 level - we also have the red 2h coral in this area so a rise to here then a drop off would make sense.

Low volume choppy August action continues still, and we are approaching the Fed Jackson Hole symposium on Friday. As such traders are looking for clues as to how aggressively they can keep rising rates in light of weakening economic conditions. Probably best to avoid driving the nail into a recession! Energy costs are the main thing that needs to be controlled now - that in turn will lower inflation. Slowing economic demand via increased rates isn't really appropriate!

If the bulls were to push above the 7530 area then 7545 is the key fib then R2 at 7569 - once again aligning with that 7570 area that we dropped off on Friday. Above that then 7600 still beckons as a round number but I am not expecting us to get that high today.

The bears could possibly break 7440 though, especially if the S&P500 goes for the 4104 key fib support level. That will weigh on other markets. On the bulls side though is the fact that the ASX200 rose today, helped by commodity stocks, and that may well be the case for the FTSE100 as well.

If they do break 7440 then 7388 is S3 and probably worth looking out for. It's worth nothing though that the daily 25ema support (usually a good swing entry line) is at 7447 - so again this lends weight to support in this area.

So, not too much more to say, we may well have a bit of bull today, especially if the 7470 continues to be defended in the short term, and a rise towards the 7530 level would be good today.

Good luck!

Recommended Broker

IC Markets - offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!

Membership and Live Trading

If you would like more detailed analysis for FTSE100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.

What you get

Daily Analysis pre market open (sent around 7am each day) for FTSE100, DAX40, Gold and S&P500.
Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
Telegram live trading room and webinar group membership for discussion and realtime trade updates