Quote from Nick on 4th November 2021, 11:36 am

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

Global stocks hovered around record levels Thursday after the Federal Reserve unveiled an expected tapering of stimulus and said it will be patient about raising interest rates. Treasury yields were steady.

MSCI Inc.’s world share gauge was set for a new peak, as Japan and China climbed. U.S. futures fluctuated and European ones rose in the wake of all-time highs for the S&P 500, Dow Jones Industrial Average, Nasdaq 100 and Russell 2000. The Fed indicated it was alert to inflation risks but still sees them as likely transitory due to pandemic-linked supply and demand imbalances.

The Treasury yield curve remained steeper compared with before the Fed decision. Measures of bond-market inflation expectations have ticked up -- suggesting residual concerns about curbing price pressures. Traders largely maintained bets on the timing of rate moves: the first hike is seen around July, with some 55 basis points of increases by end-2022. The dollar rose.

European Central Bank President Christine Lagarde said the monetary authority was “very unlikely” to hike rates next year. Economists are split on whether the Bank of England will boost borrowing costs Thursday.

Patient Fed
The Fed will begin winding down its asset purchases by $15 billion starting this month, as expected, clearing the way for rate increases as soon as the second half of next year. The FOMC’s policy statement hedged the risk that inflation might not prove to be transitory, warning that supply chain imbalances have meant “sizable price increases in some sectors.” The central bank will cut Treasury purchases by $10 billion and mortgage-backed securities by $5 billion, but left the door open to accelerating that pace. Fed Chair Jerome Powell did his best to delink tapering from the outlook on hikes. The timing for tightening “will depend on the path of the economy,” he said, adding that the Fed can be patient.

FTSE 100 live outlook prediction analysis for 4th November 2021

We got a nice hold of the 7240 support level yesterday though a lot of treading water while we awaited the FOMC policy decision. However the bulls managed to put in a bit of a rise from there, along with the S&P rising strongly towards the 4670 resistance. Next key levels on the radar are 7315 and 7350 for the FTSE and the round number of 4700 for the S&P though we will probably get a stop hunt fishing expedition just above that if we see that today or tomorrow,

Generally for the moment it remains a bullish picture. We do have the BoE rate decision today though at midday so keep an eye out for that as the main take away will be the voting pattern and minutes as the rate is likely to remain at 0.1%

With the drop off 7280 down to the 7240 level the 2h chart is bearish, however, if the bulls are quick out the blocks its on the cusp of going bullish and could lock in with 7270 support. We may though see an initial drop down to test the 30m coral support at 7257 first, with S1 just below this at 7245. The bears may not show up in earnest till next week once the bulls have managed to get the price up past the 7300 level. That level has been strong resistance so far though, so even a rise to 7315 today will likely see the bears have a go again.

If the bears were to take it below the 7240 level then wee likely see 7215 where we have the S2 level and just below the key fib, but also crucially the bottom of both the Raff channels as you can see from the chart. Ergo this level may well hold if seen, at least initially. The Raff channels are still heading up, so the trend remains bullish on the longer time frames and the S&P still looks like it wants that 4700 level!

Traditionally the back end of next week sees a bit of a pull back again before the year end push resumes, and with the seasonality playing out well for the September and early October weaker period, we may well see that pattern unfold. FTSE could still be on for that 7500 year end, though next year is a whole other kettle of fish. And probably a bearish one at that!

If the bulls were to break above the 7355 level this week or early next then the top of the Raff channels are at the 7400 area currently and a rise towards that area isn't beyond the realms of possibility.

So, watch 7315 and 7350 for resistance today. 7257 and 7215 for support. Good luck today.

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