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Afghanistan weighs on markets | 7150 7130 7100 support | 7181 7200 7222 resistance

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

FTSE 100 live outlook prediction analysis for 16th August 2021

Last week saw London's FTSE 100 record its longest weekly winning streak since November. It ended 0.4pc higher at 7218.71 points, led by healthcare stocks which were up 2.1pc. It has risen 1.3pc this week in part on a weaker pound.

With the deteriorating situation in Afghanistan, we may well see a bit more downside to start with today, as the political backlash kicks in. The bulls didn't manage to break above the 7220 resistance on Friday and we have dropped off further since testing that level, with the daily support at 7150 now in play. I would like to see a hold of this to start with though a break of it will likely lead to the 7110 daily support level where we have the 25ema and the bottom of the 10 day Raff channel.

Below that then the bears will start to get stronger and we will see the weakness kick in for the second half of August.

If the bulls do appear at 7150 then a rise towards the 7200 level looks likely and will be a back test of S1 (7194) and also the 30m coral line at around the 7200 level. This has now gone red and is steadily dropping so could well hold the bulls on any rise today. Above this 7205 area then the bulls will be aiming to break the 7222 level this time around which then opens up 7250.

Likewise with the S&P500 the bulls will be keen to defend the S3 level at 4446 and also the 200ema at 4447 so should we see a dip down to this area then a bounce here may well play out.

A bull Monday feels like a big ask however the ASX200 did have a dip and rise play out initially and we may well do the same. However, once it bounced it then sold off so that pattern may well repeat for us if the bulls cannot break the 7205 area.

Good luck today.

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Asian Session

Stocks and U.S. equity futures slipped Monday and Treasuries climbed on concerns that the economic recovery from the pandemic is slowing as the fast-spreading delta virus strain hampers reopening.

Japanese shares slid and haven demand spurred the yen amid expectations a virus state of emergency in some regions including Tokyo will be extended. Chinese technology stocks slumped after more criticism of online gaming from state media. The latest China retail sales and industrial output data showed activity slowed more than expected, with virus outbreaks adding new risks.

S&P 500, Nasdaq 100 and European equity contracts retreated. A drop in U.S. consumer sentiment to a near-decade low added to the mood of caution. Treasury yields fell, the dollar firmed and Australia’s currency declined.

Investors are also tracking alarm in Congress as the Taliban take control of Afghanistan in the vacuum left by departing U.S. and NATO forces. President Joe Biden’s economic agenda is already facing lawmaker obstacles, after some House Democrats threatened to withhold support from a $3.5 trillion budget blueprint until a bipartisan infrastructure package is signed into law.

Equities in the U.S. and Europe hit records last week, bolstered by vaccine rollouts. But the delta variant remain a threat: there are fears the world may struggle to reach herd immunity, where the pathogen stops spreading rapidly because enough people are shielded against it. Inoculations are lagging in Asia, pressuring its markets, while in China expectations of monetary policy easing are growing to cushion the nation’s recovery. [Bloomberg]

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