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Bulls defend 7000 but for how long | 7050 7000 support | 7100 7130 resistance

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

The price of commodities and many stocks tumbled on Thursday as investors shifted into safe havens on fears a global recovery will be derailed as infections spiral. Iron ore and copper dropped to multi-month lows while oil sank for a sixth straight session to its lowest since May.

London’s FTSE 100 fell 1.5pc, or 110.46 points, to close at a three-week low of 7,058.86. The blue-chip index recorded its worst single-day drop in a month, shedding £30bn. Just 19 constituents ended in the green with Anglo American, Anto­fagasta, BP and Royal Dutch Shell among the top drags.

Major European bourses joined the sell-off, with France’s Cac sinking 2.4pc, Germany’s Dax falling 1.3pc and Italy’s FTSE Mib shedding 1.6pc. It followed an overnight plummet in Asian stocks. Wall Street dropped at open before paring losses as tech stocks rose.

The US Fed warned late on Wednesday that it could start to taper coronavirus stimulus measures before the year end, despite a rising number of delta variant cases and signs of slowing growth.

China’s crackdown on the money made by its business elite, meanwhile, added to gloomy sentiment and hit luxury stocks popular with the middle class of the world’s second largest economy. Burberry sank 6.6pc to its lowest share price since February as the second worst performing blue-chip, while European rivals LVMH and Kering each sank more than 5pc into the red.

FTSE 100 live outlook prediction analysis for 20th August 2021

Well the news flow has turned a bit negative but the markets are holding up, with the brief move below 7000 on the FTSE100 shaken off as the bulls fought back yesterday. Overnight has seen things being fairly stable to the point that we have a green 30m coral to start with and support from that at 7053 initially. Should we break below that though the bears will likely take it down to 7000 again and with S1 and the key fib here we may well see a bounce again here.

We also have the bottom of the 20d Raff channel here so the bulls will certainly be keen to hold above this. However its Friday, so likely to be odd!

Initial resistance to start with is at the 7072 level where we have the 30m 25ema, and the bulls will be keen to break above this. That then opens up a test of the 7106 level where we have the key fib, and just below the 30m 200ema which is at 7120. With R1 at 7134 I think the 7125ish area may well see a stutter initially, as things remain jittery and investors are pretty nervy - especially as we are still in the weaker August and the back end of it may well be more bearish overall.

I still think that we may well end the year strongly though and may well see 7500 again this year.

If the bulls break above 7134 then 7192 is the next level of note where we have R2 - but that does feel a big ask for today.

Below 7000 then the bears will be in the driving seat and we likely see 6950 and then S2 at 6932 looms large too. 6950 could well see a bounce though so would try a long here.

That said, I am watching 7050 and 7000 as support and 7100 and 7130 as the key resistance levels for today.

Have a good weekend and good luck today.

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Asian Session

Asian stocks fell Friday as the fast-spreading delta virus strain stoked concerns about economic growth and China’s regulatory curbs sapped sentiment. The dollar was firm and commodities trimmed a weekly drop.

MSCI Inc.’s Asia-Pacific gauge was at the lowest since December. Shares slid in China and Hong Kong -- Alibaba Group Holding Ltd. hit another record low -- as Beijing cracks down on private industry. The latest step against big tech is legislation setting out tougher rules for handling user data. State media also scrutinized liquor makers, online pharmacies and cosmetics firms.

U.S. equity futures dipped after modest overnight S&P 500 and Nasdaq 100 gains during choppy trading. Treasuries held a climb and the dollar was around a nine-month high. Commodities stabilized but their recent slump is flashing a warning about the impact of Covid-19’s resurgence on the global recovery.

The delta strain is stoking doubts about achieving herd immunity to underpin economic reopening, just as Chinese activity slows and the Federal Reserve eyes a gradual reduction of emergency stimulus. That mix puts global stocks and commodities on course for one of their worst weeks this year. Analysts cautioned that options expirations due Friday may be fueling volatility. [Bloomberg]

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