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BoE pumps in money | short lived bounce | 6966 6930 6800 support | 7030 7098 resistance

#1 · 29th September 2022, 10:03 am

Quote from Nick on 29th September 2022, 10:03 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The president of the World Bank has this morning warned of recession in Europe as the pound and euro again fell against the dollar overnight. Following Wednesday’s rally, the pound was down again to below $1.08 in early trading, while the euro was also down against the dollar this morning.
In a speech at Stanford University in California, David Malpass warned the West that it could take years for global energy production to recover from the supply crisis triggered by Russia’s invasion of Ukraine. Mr Malpass added that the energy crisis would prolong the risk of a period of low growth and high inflation, or stagflation.
Asian equities jumped on Thursday following the strongest day for US stocks since early August after the Bank of England unveiled a bond-buying program that triggered a global rally in government debt.
Shares rose in Japan, Hong Kong and Australia, mirroring a 2% advance for the S&P 500, which snapped a six-day losing streak. Lingering caution was evident with small declines in US stock futures and the dollar’s advance against the pound and the yen.
Asian share markets rose on Thursday after Britain’s central bank launched an emergency bond buying programme to stabilise a furious sell-off in gilts, though trade was skittish and sterling remained under pressure.
The Bank of England said it will buy as much as £5 billion ($5.4 billion) a day of long-dated government bonds until Oct. 14. It spent about a billion pounds on Wednesday and 30-year gilt yields fell 105 basis points, the biggest drop ever according to Refinitiv records stretching back to 1992. The move buoyed sterling and offered some salve to a fractious mood in markets, but by mid-morning in Tokyo the pound was already struggling for support and down 0.6% to $1.0818.
The fallout from unfunded tax cuts announced in Britain last week has reverberated across financial markets after setting off a collapse in British asset prices. The BoE’s intervention followed steps in Korea, India and Indonesia to stabilise their financial markets this week as the U.S. dollar rallied broadly.
Wall Street rallied, too, with the S&P 500 snapping a six-day losing streak to surge nearly 2%.
The mood gave pause to the U.S. dollar’s march higher and the dollar index had its worst session in 2-1/2 years as the greenback recoiled from lofty heights. It was soon trading firmly again, however, in Asia on Thursday.
The dollar’s pullback helped oil and gold make gains, which were held into the Asia day. Brent crude futures rose 0.2% to $89.50 a barrel. Spot gold was steady at $1,656 an ounce.
Global Bounce
The Bank of England’s dramatic intervention in government bonds has ignited a global bounce from stocks to debt, underscoring how every asset remains at the mercy of monetary officials in crisis-fighting mode. After British policymakers pledged a fresh round of debt buying, the S&P 500 surged 2% in its best rally since 2020. But we’re not out of the woods yet. For all of 2022, dip buying has proved a futile strategy, with every bounce being thwarted across bonds and stocks. Meanwhile, UK Chancellor of the Exchequer Kwasi Kwarteng is facing calls to reverse a package of planned tax cuts that’s sparked days of turmoil in financial markets. The chaos has got the Biden administration worried.
FTSE100 live outlook prediction analysis for 29th September 2022
How long will the BoE's intervention last? It boosted markets and cable but all are now dropping back again, with cable likely to still test the 103 level again (and possibly just below parity) though a bounce around the 100 area would still fit the charts. For the FTSE100, they managed to pump it up back above the 7000 level to an overnight high at 7040 however it has since slipped back.
Initially today we have support at the daily pivot at 6966 though lower down we have decent looking support from both the key fib at 6923, and also the now bullish 2h chart at 6930 with the Hull MA here. As such, a slide down to here to stop hunt the various longs from yesterday would fit quite well. Last day of the trading week and also the month tomorrow so we could see a possible rise for the month end figures. Also end of Q3.....
For the bulls, they will be looking to break the 7040 level where we have the 200ema and the key fib for today, along with it being the overnight high. R1 is then the next key level at 7098 along with the round number. 7100 seems a bit of a big ask for today and I think that the 7050 level will likely get a reaction if seen. Would also fit with the usual pattern of an overshoot of the key resistance - 7040 in this case today.
If more fears and worries over the Government's plan persists today and the bears take it below the 6930 level then the bottom of the Raff channels are both at the 6800 level for today - maybe wont slide quite that low but its the next level of note on the daily chart. S1 is 6889 so may get a reaction if the bearish momentum isnt too strong though.
All week we have generally been shorting the rallies as the seasonally weaker second half of September plays out, and that remains the case for the moment. The rise yesterday was driven by BoE intervention rather than anything technical so shorting is still the bias for the moment.
Not to much more to say really, watching the pivot on the SP (3683) and FTSE as initial support but full expecting a drop down to the 2h supports on the FTSE100 and the S&P to play out - 6930 and 3630.
Good luck today.
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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 president of the World Bank has this morning warned of recession in Europe as the pound and euro again fell against the dollar overnight. Following Wednesday’s rally, the pound was down again to below $1.08 in early trading, while the euro was also down against the dollar this morning.

In a speech at Stanford University in California, David Malpass warned the West that it could take years for global energy production to recover from the supply crisis triggered by Russia’s invasion of Ukraine. Mr Malpass added that the energy crisis would prolong the risk of a period of low growth and high inflation, or stagflation.

Asian equities jumped on Thursday following the strongest day for US stocks since early August after the Bank of England unveiled a bond-buying program that triggered a global rally in government debt.

Shares rose in Japan, Hong Kong and Australia, mirroring a 2% advance for the S&P 500, which snapped a six-day losing streak. Lingering caution was evident with small declines in US stock futures and the dollar’s advance against the pound and the yen.

Asian share markets rose on Thursday after Britain’s central bank launched an emergency bond buying programme to stabilise a furious sell-off in gilts, though trade was skittish and sterling remained under pressure.

The Bank of England said it will buy as much as £5 billion ($5.4 billion) a day of long-dated government bonds until Oct. 14. It spent about a billion pounds on Wednesday and 30-year gilt yields fell 105 basis points, the biggest drop ever according to Refinitiv records stretching back to 1992. The move buoyed sterling and offered some salve to a fractious mood in markets, but by mid-morning in Tokyo the pound was already struggling for support and down 0.6% to $1.0818.

The fallout from unfunded tax cuts announced in Britain last week has reverberated across financial markets after setting off a collapse in British asset prices. The BoE’s intervention followed steps in Korea, India and Indonesia to stabilise their financial markets this week as the U.S. dollar rallied broadly.

Wall Street rallied, too, with the S&P 500 snapping a six-day losing streak to surge nearly 2%.

The mood gave pause to the U.S. dollar’s march higher and the dollar index had its worst session in 2-1/2 years as the greenback recoiled from lofty heights. It was soon trading firmly again, however, in Asia on Thursday.

The dollar’s pullback helped oil and gold make gains, which were held into the Asia day. Brent crude futures rose 0.2% to $89.50 a barrel. Spot gold was steady at $1,656 an ounce.

Global Bounce
The Bank of England’s dramatic intervention in government bonds has ignited a global bounce from stocks to debt, underscoring how every asset remains at the mercy of monetary officials in crisis-fighting mode. After British policymakers pledged a fresh round of debt buying, the S&P 500 surged 2% in its best rally since 2020. But we’re not out of the woods yet. For all of 2022, dip buying has proved a futile strategy, with every bounce being thwarted across bonds and stocks. Meanwhile, UK Chancellor of the Exchequer Kwasi Kwarteng is facing calls to reverse a package of planned tax cuts that’s sparked days of turmoil in financial markets. The chaos has got the Biden administration worried.

FTSE100 live outlook prediction analysis for 29th September 2022

How long will the BoE's intervention last? It boosted markets and cable but all are now dropping back again, with cable likely to still test the 103 level again (and possibly just below parity) though a bounce around the 100 area would still fit the charts. For the FTSE100, they managed to pump it up back above the 7000 level to an overnight high at 7040 however it has since slipped back.

Initially today we have support at the daily pivot at 6966 though lower down we have decent looking support from both the key fib at 6923, and also the now bullish 2h chart at 6930 with the Hull MA here. As such, a slide down to here to stop hunt the various longs from yesterday would fit quite well. Last day of the trading week and also the month tomorrow so we could see a possible rise for the month end figures. Also end of Q3.....

For the bulls, they will be looking to break the 7040 level where we have the 200ema and the key fib for today, along with it being the overnight high. R1 is then the next key level at 7098 along with the round number. 7100 seems a bit of a big ask for today and I think that the 7050 level will likely get a reaction if seen. Would also fit with the usual pattern of an overshoot of the key resistance - 7040 in this case today.

If more fears and worries over the Government's plan persists today and the bears take it below the 6930 level then the bottom of the Raff channels are both at the 6800 level for today - maybe wont slide quite that low but its the next level of note on the daily chart. S1 is 6889 so may get a reaction if the bearish momentum isnt too strong though.

All week we have generally been shorting the rallies as the seasonally weaker second half of September plays out, and that remains the case for the moment. The rise yesterday was driven by BoE intervention rather than anything technical so shorting is still the bias for the moment.

Not to much more to say really, watching the pivot on the SP (3683) and FTSE as initial support but full expecting a drop down to the 2h supports on the FTSE100 and the S&P to play out - 6930 and 3630.

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 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