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A bounce after that sell off | 7150 7200 7246 resistance | 7055 6968 support

#1 · 6th July 2022, 10:07 am

Quote from Nick on 6th July 2022, 10:07 am
FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 dropped significantly yesterday as recession fears returned to markets. The blue-chip index dropped just shy of 2pc. There were losses across the board, but oil giants BP and Shell and miners such as Glencore were among the biggest drags as commodity prices fell. Financial stocks including HSBC, Barclays and Prudential also sank after the Bank of England told lenders to brace for an economic storm.
Two of the most senior members of Boris Johnson’s government quit in quick succession, putting the UK prime minister in grave political danger after months of scandals eroded his authority. Chancellor of the Exchequer Rishi Sunak said in his resignation letter that “we cannot continue like this,” while Health Secretary Sajid Javid told Johnson he’s lost confidence in him. Johnson intends to stay on. Adding more pressure on Johnson’s position, the resignations came just as the Prime Minister was acknowledging in a televised address that he had made a “mistake” in promoting Chris Pincher who had resigned as a government whip following allegations he had groped two men. That was damaging to Johnson, who promoted Pincher to the role in a bid to bolster his own faltering support.
Stocks dipped in Asia on Wednesday as fears of an economic downturn lingered over financial markets, leaving the dollar hovering at the highest level in more than two years.
Falls in Japan, China and Hong Kong hit Asian shares. US futures wavered after a volatile Wall Street session saw equities close up but with little conviction that global shares can escape the clutches of a bear market anytime soon.
Asian stocks fell and the dollar stood by a two-decade high on the euro on Wednesday as investors' fears deepened that the continent is leading the world into recession, while oil and European equity futures made a wobbly attempt to steady.
Brent crude futures have slid this month on worries that a global slowdown will sap demand. Prices slumped 9.5% to a 2-1/2 month low of $101.10 on Tuesday, before bouncing slightly to $103.86 a barrel in the Asia session on Wednesday.
MSCI's index of Asia-Pacific stocks outside Japan fell 1%, led by a 2% drop for Taiwan's benchmark index (.TWII) - heavy with growth-sensitive computer chip makers - which hit an 18-month low. Japan's Nikkei fell 1.1%.
S&P 500 futures fell 0.1% while FTSE futures and EuroSTOXX 50 futures rose 1% after heavy Tuesday selling.
News has been relentlessly negative, with talk of gas rationing in Europe, a political crisis in Britain and a fresh flare up of COVID-19 cases prompting fresh restrictions in Shanghai. read more
In the United States, the two-year Treasury yield has dropped below the 10-year yield , a reliable market signal of a recession capping growth in the medium term.
The Recession Trade
Oil prices have plummeted, bonds are rallying and the dollar is the strongest in more than two years — all signs of the recession fears gripping markets. Stocks in Asia set to come under some pressure on Wednesday too. Week after week of on-the-fly calculations about the intensity of inflation and the likelihood of a recession are preventing markets from finding an equilibrium. The churn is spurring increasingly worse forecasts for when and where the volatility will cease. The pessimists have history on their side. Strategas Securities compared market and economic indicators now versus past bear cycles over nine decades and found virtually no reason to believe the rout in equities is over.
FTSE 100 live outlook prediction analysis for 6th July 2022
Well that was all very bearish yesterday and after a -200 day on the FTSE I would expect to see a bounce today. We have backtested the 7140 broken support level overnight but the bulls will be gunning to retest that in hours, and also to push above it.
The S&P held the 3740 level yesterday and climbed well from there, and the bulls on that will be looking to defend any drops today (first support 3808, then 3798) and go for a rise towards the 3895 resistance fib level. If they do so then that should pull the FTSE100 up as well, and a push past that 7140. 3798 is a now green 2h coral support so looks fairly key.
Initial resistance is 7128 with the daily pivot here, then above 7140 we have 7176 as the 30m 200ema and may well see a stutter here. Ultimately though today a rise towards the R1 level at 7246 would fit well, and undo a bit of the damage from yesterday. Can we get a rise of that magnitude though!?
Trouble at the top of the political spectrum with Boris hanging on by a thread after the joint resignations yesterday. Always good to have a solid stable government as we go into a sustained period of recession, cost of living crisis, pandemic flare ups, war, etc etc.......
Support wise, then the key fib at 7055 is first up, and then the 10d Raff at 7020. This is still somewhat optimistically heading upwards at the moment!
Below 7020 (and that's just above the level that we climbed from yesterday, 7010) then we have the 6968 for S1, but also daily support above at 6985. As this is just below the psychologically important 7000 then we should see these defended.
If the bulls can push on today then we should see some more optimism during July, and ahead of earnings season on the 15th. Oil dropped a lot yesterday which if it can continue that and stay below $100 then that should help to ease inflation and also reduce the pump price. As energy is the main driver of the current inflation (closely followed by food) we could have seen peak inflation for the moment. This winter may of course be a different story!
So, feeling that we may well see a bullish day today, and that 7140 to be retested and a possible break higher above that. Just need the bulls to step up!
Good luck today.
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If you would like more detailed analysis for FTSE 100, 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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FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The FTSE 100 dropped significantly yesterday as recession fears returned to markets. The blue-chip index dropped just shy of 2pc. There were losses across the board, but oil giants BP and Shell and miners such as Glencore were among the biggest drags as commodity prices fell. Financial stocks including HSBC, Barclays and Prudential also sank after the Bank of England told lenders to brace for an economic storm.

Two of the most senior members of Boris Johnson’s government quit in quick succession, putting the UK prime minister in grave political danger after months of scandals eroded his authority. Chancellor of the Exchequer Rishi Sunak said in his resignation letter that “we cannot continue like this,” while Health Secretary Sajid Javid told Johnson he’s lost confidence in him. Johnson intends to stay on. Adding more pressure on Johnson’s position, the resignations came just as the Prime Minister was acknowledging in a televised address that he had made a “mistake” in promoting Chris Pincher who had resigned as a government whip following allegations he had groped two men. That was damaging to Johnson, who promoted Pincher to the role in a bid to bolster his own faltering support.

Stocks dipped in Asia on Wednesday as fears of an economic downturn lingered over financial markets, leaving the dollar hovering at the highest level in more than two years.

Falls in Japan, China and Hong Kong hit Asian shares. US futures wavered after a volatile Wall Street session saw equities close up but with little conviction that global shares can escape the clutches of a bear market anytime soon.

Asian stocks fell and the dollar stood by a two-decade high on the euro on Wednesday as investors' fears deepened that the continent is leading the world into recession, while oil and European equity futures made a wobbly attempt to steady.

Brent crude futures have slid this month on worries that a global slowdown will sap demand. Prices slumped 9.5% to a 2-1/2 month low of $101.10 on Tuesday, before bouncing slightly to $103.86 a barrel in the Asia session on Wednesday.

MSCI's index of Asia-Pacific stocks outside Japan fell 1%, led by a 2% drop for Taiwan's benchmark index (.TWII) - heavy with growth-sensitive computer chip makers - which hit an 18-month low. Japan's Nikkei fell 1.1%.

S&P 500 futures fell 0.1% while FTSE futures and EuroSTOXX 50 futures rose 1% after heavy Tuesday selling.

News has been relentlessly negative, with talk of gas rationing in Europe, a political crisis in Britain and a fresh flare up of COVID-19 cases prompting fresh restrictions in Shanghai. read more

In the United States, the two-year Treasury yield has dropped below the 10-year yield , a reliable market signal of a recession capping growth in the medium term.

The Recession Trade
Oil prices have plummeted, bonds are rallying and the dollar is the strongest in more than two years — all signs of the recession fears gripping markets. Stocks in Asia set to come under some pressure on Wednesday too. Week after week of on-the-fly calculations about the intensity of inflation and the likelihood of a recession are preventing markets from finding an equilibrium. The churn is spurring increasingly worse forecasts for when and where the volatility will cease. The pessimists have history on their side. Strategas Securities compared market and economic indicators now versus past bear cycles over nine decades and found virtually no reason to believe the rout in equities is over.

FTSE 100 live outlook prediction analysis for 6th July 2022

Well that was all very bearish yesterday and after a -200 day on the FTSE I would expect to see a bounce today. We have backtested the 7140 broken support level overnight but the bulls will be gunning to retest that in hours, and also to push above it.

The S&P held the 3740 level yesterday and climbed well from there, and the bulls on that will be looking to defend any drops today (first support 3808, then 3798) and go for a rise towards the 3895 resistance fib level. If they do so then that should pull the FTSE100 up as well, and a push past that 7140. 3798 is a now green 2h coral support so looks fairly key.

Initial resistance is 7128 with the daily pivot here, then above 7140 we have 7176 as the 30m 200ema and may well see a stutter here. Ultimately though today a rise towards the R1 level at 7246 would fit well, and undo a bit of the damage from yesterday. Can we get a rise of that magnitude though!?

Trouble at the top of the political spectrum with Boris hanging on by a thread after the joint resignations yesterday. Always good to have a solid stable government as we go into a sustained period of recession, cost of living crisis, pandemic flare ups, war, etc etc.......

Support wise, then the key fib at 7055 is first up, and then the 10d Raff at 7020. This is still somewhat optimistically heading upwards at the moment!

Below 7020 (and that's just above the level that we climbed from yesterday, 7010) then we have the 6968 for S1, but also daily support above at 6985. As this is just below the psychologically important 7000 then we should see these defended.

If the bulls can push on today then we should see some more optimism during July, and ahead of earnings season on the 15th. Oil dropped a lot yesterday which if it can continue that and stay below $100 then that should help to ease inflation and also reduce the pump price. As energy is the main driver of the current inflation (closely followed by food) we could have seen peak inflation for the moment. This winter may of course be a different story!

So, feeling that we may well see a bullish day today, and that 7140 to be retested and a possible break higher above that. Just need the bulls to step up!

Good luck today.

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 FTSE 100, 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 FTSE, DAX, Gold and S&P.
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