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Bad news abounds | Brexit deal edges closer | 6400 support | 6480 6510 6550 resistance

#1 · 21st December 2020, 9:53 am

Quote from Nick on 21st December 2020, 9:53 am
FTSE 100 live outlook prediction analysis for 21st December 2020
Wider markets ended the week with lacklustre momentum as a EU-UK trade deal edges closer, alongside US stimulus talks, but with no final conclusion. The FTSE 100 edged down 21.88 to 6,529.18. It fell just 0.2pc compared to last Friday’s close.
Been quite the weekend of news though with the latest mutation of the virus causing havoc as it sweeps across the UK, and in fact other countries. The pound has gapped down from its 136 level seen on Friday as the FTSE plays out a rise and dip day. The US markets have stayed up well, with the S&P remaining above the 3705 level after the late Friday pump.
Amazon.co.uk Widgets
Britain was hit with a travel ban on Sunday night by a host of EU countries to halt the spread of the new, more infectious coronavirus strain. The ban on passenger flights and freight transport from the UK threatened to disrupt food supplies, Christmas gifts and even the Covid vaccine as well as hitting the festive travel plans of an estimated 250,000 Britons.
France, Belgium, the Netherlands, Germany and Ireland were among 11 European countries to close their borders to flights and most freight lorries, trains and ferries from the UK from midnight on Sunday night, but the ban could be extended to the entire bloc.
The EU will hold an emergency meeting on Monday morning to discuss a blanket ban that could cost UK consumers £400 million in cancelled bookings. Beyond Europe, bans on flights from Britain were being implemented by Israel and in the Americas, including by Canada, Chile and Argentina.
US officials however signalled they were holding off on the move for now. In a sign of the growing concern within the Government, Boris Johnson will on Monday chair a meeting of the emergency Cobra committee to discuss "the steady flow of freight in and out of the UK", Downing Street said.
Christmas Havoc
The new strain of the coronavirus is “out of control,” U.K. Health Secretary Matt Hancock warned, as London went into an emergency lockdown and travel with Europe was banned. On the other side of the world, Sydney’s 5 million residents are being encouraged to forgo end-of-year celebrations and anything else that might fan a coronavirus outbreak that’s closed state borders and threatens to scupper Christmas festivities. Experts warnvaccines don't mean we'll see the last of Covid.
Market Open
Progress on a U.S. stimulus package curbed appetite for the yen and Swiss franc, while concerns about the U.K.’s worsening virus outbreak and Brexit talks sent the pound lower. Moves were pronounced early Monday across currency markets, with the pound under pressure as “significant differences” remain in trade talks between the U.K. and the European Union. Congressional negotiators in the U.S. reached a compromise that may clear the way for a final agreement on a roughly $900 billion spending plan. Asian stocks may search for direction after U.S. equities dipped on Friday.[Bloomberg]
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US & Asia Overnight from Bloomberg
The dollar climbed and stocks edged lower as the worsening pandemic and lack of progress on Brexit trade talks sapped risk appetite despite an agreement on a U.S. stimulus package. Crude oil sank about 3%.
The pound was under pressure as U.K. authorities tackled a fast-spreading new coronavirus and an official said “significant differences” remain in trade talks with the European Union. The Australian dollar fell amid new restrictions in Sydney due to a growing virus cluster. Treasuries ticked higher with gold.
S&P 500 futures fluctuated, while most Asia Pacific equity markets retreated. Congressional leaders reached a deal on roughly $900 billion of outlays to support the U.S. economy amid escalating virus cases. European stock futures underperformed as Germany and France halted flights from Britain.
The text of the U.S. stimulus legislation is still being written, but Senate Majority Leader Mitch McConnell said on the Senate floor that “at long last we have a bipartisan breakthrough” that was needed to get the bill passed in the House and Senate. Votes on the second-largest economic-rescue measure in the nation’s history are expected Monday.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
With the news flow currently we could be on for an interesting day today, though it feels like a dip and rise will play out. Overnight we have dropped down to test the 25ema on the daily chart at 6433 and the 10 day Raff channel bottom for today at 6410. A bounce has then played out from that area after the initial gap down. To close that gap the FTSE will need to test the 6534 level.
At the end of the day the pattern of the virus is not unexpected. These things run for 18months to 2 years. We are still in the second wave, the virus has mutated to a more virulent but less deadly strain (as they always do, and we may well see further mutations of the same pattern) and the third wave will probably come in March now as the tier lock downs take effect to cap the second wave in the next week or two. We are still in wave 2 at the moment. So far only about 12% of the UK have been infected. Once that gets to about 60% then restrictions can ease, which will probably be after the third wave in late spring 2021, and once the vaccine has reached a tipping point in the number of people that have had it. So far we are following the pattern of previous pandemics to a T. By the summer 2021 we will have run the 18 month timeline and some normality will start to return. I have been basing most of my sentiment around this pattern and a repeat of the Spanish flu pandemic with its three waves - we are actually following it to the same months!
Anyway, onto today. We have seen the US markets sell the news as the stimulus bill was confirmed, and I wouldn't be surprised if we see the S&P drop down to the key 3680 support area today. Buy the rumour (Friday pump) seen the news... Bulls will be keen to defend this though as it keeps alive the rise to 3730+. A break of 3670 though and the bears will take control. Last bullish pump on the year this week maybe......
I am looking at initial support on the FTSE at 6430 where we have the 25ema on the daily, but below that 6410 where we have the 10d Raff. Below this then 6391 is S3 and the bulls will certainly try to put up a fight here as its also the bottom of the 20d Raff channel. If there is going to be any further Santa rally action it should kick in from this area. A break of this and we will start to see the worm turn as the bears take more control heading into 2021.
For resistance levels today we should see a backtest of the 6480 level where we have the key fib and also just below a backtest of S1 at 6491. Above that then the 30m coral has not surprisingly gone red and has 6510 as the main area to watch with 6536 as the 200ema above that. Can the bulls get it that high against a negative news flow and also close the gap? I wouldn't be surprised but as with every trade, you will want to be getting stops to break even and protect positions asap. The 2h coral is now also red with 6551 as resistance - seems a bit of a big ask to get that high today though. I am looking at the 6480 and possibly 6510 as the main levels of note.
Good luck today, stay nimble!
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FTSE 100 live outlook prediction analysis for 21st December 2020

Wider markets ended the week with lacklustre momentum as a EU-UK trade deal edges closer, alongside US stimulus talks, but with no final conclusion. The FTSE 100 edged down 21.88 to 6,529.18. It fell just 0.2pc compared to last Friday’s close.

Been quite the weekend of news though with the latest mutation of the virus causing havoc as it sweeps across the UK, and in fact other countries. The pound has gapped down from its 136 level seen on Friday as the FTSE plays out a rise and dip day. The US markets have stayed up well, with the S&P remaining above the 3705 level after the late Friday pump.
Amazon.co.uk Widgets
Britain was hit with a travel ban on Sunday night by a host of EU countries to halt the spread of the new, more infectious coronavirus strain. The ban on passenger flights and freight transport from the UK threatened to disrupt food supplies, Christmas gifts and even the Covid vaccine as well as hitting the festive travel plans of an estimated 250,000 Britons.

France, Belgium, the Netherlands, Germany and Ireland were among 11 European countries to close their borders to flights and most freight lorries, trains and ferries from the UK from midnight on Sunday night, but the ban could be extended to the entire bloc.

The EU will hold an emergency meeting on Monday morning to discuss a blanket ban that could cost UK consumers £400 million in cancelled bookings. Beyond Europe, bans on flights from Britain were being implemented by Israel and in the Americas, including by Canada, Chile and Argentina.

US officials however signalled they were holding off on the move for now. In a sign of the growing concern within the Government, Boris Johnson will on Monday chair a meeting of the emergency Cobra committee to discuss "the steady flow of freight in and out of the UK", Downing Street said.

Christmas Havoc

The new strain of the coronavirus is “out of control,” U.K. Health Secretary Matt Hancock warned, as London went into an emergency lockdown and travel with Europe was banned. On the other side of the world, Sydney’s 5 million residents are being encouraged to forgo end-of-year celebrations and anything else that might fan a coronavirus outbreak that’s closed state borders and threatens to scupper Christmas festivities. Experts warnvaccines don't mean we'll see the last of Covid.

Market Open

Progress on a U.S. stimulus package curbed appetite for the yen and Swiss franc, while concerns about the U.K.’s worsening virus outbreak and Brexit talks sent the pound lower. Moves were pronounced early Monday across currency markets, with the pound under pressure as “significant differences” remain in trade talks between the U.K. and the European Union. Congressional negotiators in the U.S. reached a compromise that may clear the way for a final agreement on a roughly $900 billion spending plan. Asian stocks may search for direction after U.S. equities dipped on Friday.[Bloomberg]

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US & Asia Overnight from Bloomberg

The dollar climbed and stocks edged lower as the worsening pandemic and lack of progress on Brexit trade talks sapped risk appetite despite an agreement on a U.S. stimulus package. Crude oil sank about 3%.

The pound was under pressure as U.K. authorities tackled a fast-spreading new coronavirus and an official said “significant differences” remain in trade talks with the European Union. The Australian dollar fell amid new restrictions in Sydney due to a growing virus cluster. Treasuries ticked higher with gold.

S&P 500 futures fluctuated, while most Asia Pacific equity markets retreated. Congressional leaders reached a deal on roughly $900 billion of outlays to support the U.S. economy amid escalating virus cases. European stock futures underperformed as Germany and France halted flights from Britain.

The text of the U.S. stimulus legislation is still being written, but Senate Majority Leader Mitch McConnell said on the Senate floor that “at long last we have a bipartisan breakthrough” that was needed to get the bill passed in the House and Senate. Votes on the second-largest economic-rescue measure in the nation’s history are expected Monday.

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

With the news flow currently we could be on for an interesting day today, though it feels like a dip and rise will play out. Overnight we have dropped down to test the 25ema on the daily chart at 6433 and the 10 day Raff channel bottom for today at 6410. A bounce has then played out from that area after the initial gap down. To close that gap the FTSE will need to test the 6534 level.

At the end of the day the pattern of the virus is not unexpected. These things run for 18months to 2 years. We are still in the second wave, the virus has mutated to a more virulent but less deadly strain (as they always do, and we may well see further mutations of the same pattern) and the third wave will probably come in March now as the tier lock downs take effect to cap the second wave in the next week or two. We are still in wave 2 at the moment. So far only about 12% of the UK have been infected. Once that gets to about 60% then restrictions can ease, which will probably be after the third wave in late spring 2021, and once the vaccine has reached a tipping point in the number of people that have had it. So far we are following the pattern of previous pandemics to a T. By the summer 2021 we will have run the 18 month timeline and some normality will start to return. I have been basing most of my sentiment around this pattern and a repeat of the Spanish flu pandemic with its three waves - we are actually following it to the same months!

Anyway, onto today. We have seen the US markets sell the news as the stimulus bill was confirmed, and I wouldn't be surprised if we see the S&P drop down to the key 3680 support area today. Buy the rumour (Friday pump) seen the news... Bulls will be keen to defend this though as it keeps alive the rise to 3730+. A break of 3670 though and the bears will take control. Last bullish pump on the year this week maybe......

I am looking at initial support on the FTSE at 6430 where we have the 25ema on the daily, but below that 6410 where we have the 10d Raff. Below this then 6391 is S3 and the bulls will certainly try to put up a fight here as its also the bottom of the 20d Raff channel. If there is going to be any further Santa rally action it should kick in from this area. A break of this and we will start to see the worm turn as the bears take more control heading into 2021.

For resistance levels today we should see a backtest of the 6480 level where we have the key fib and also just below a backtest of S1 at 6491. Above that then the 30m coral has not surprisingly gone red and has 6510 as the main area to watch with 6536 as the 200ema above that. Can the bulls get it that high against a negative news flow and also close the gap? I wouldn't be surprised but as with every trade, you will want to be getting stops to break even and protect positions asap. The 2h coral is now also red with 6551 as resistance - seems a bit of a big ask to get that high today though. I am looking at the 6480 and possibly 6510 as the main levels of note.

Good luck today, stay nimble!

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

Keep up to date with new content, free sign up below

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