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Bulls drive it higher | 9.4% inflation | 7340 7382 7410 resistance | 7278 7250 support

#1 · 20th July 2022, 9:56 am

Quote from Nick on 20th July 2022, 9:56 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE100 rose yesterday as a buoyant global mood and strong gains by banks and consumer staples offset fears of a big interest rate hike next month after stronger-than-expected jobs data. A positive break above 7300 bodes well though there is a risk its just a dead cat bounce. The blue-chip index reversed early losses and closed 1% higher, while the FTSE 250 index advanced 1.4%.
Britain's unemployment rate held at 3.8pc in the three months to May and the number of people in work rose by the most since the middle of 2021, data showed, suggesting the cost-of-living squeeze has not yet hit demand for staff.
Traders were pricing in a 90.4pc chance of an aggressive 50 basis point rate hike next month, with consumer prices and retail sales data due later this week likely offering fresh clues on inflation and the health of the British consumer.
Stocks extended a rally Wednesday amid a retreat in the dollar and speculation that the worst of this year’s equity rout may be over.
Technology shares fueled a climb of more than 1.5% in a gauge of Asian equities after the S&P 500’s biggest jump since June. European futures pushed higher and US contracts were in the green too, encouraged by a Netflix Inc. surge in extended trading on a smaller-than-expected subscriber loss.
Asian shares extended a global rally on Wednesday as strong U.S. corporate earnings and the expected resumption of Russian gas supply to Europe helped lift sentiment and ease fears of a recession, while the dollar was mired near two-week lows.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 1.1% in early Asia trade, driven by a 1.5% jump in resources-heavy Australia, a 1.1% gain in South Korean shares and 1.5% jump in Hong Kong stocks. Japan’s Nikkei surged 2.1%.
S&P 500 futures rose 0.3%, while Nasdaq futures firmed 0.4%.
U.S. stocks closed with sharp gains on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering respite to investors worried about higher inflation and Federal Reserve rate hikes denting the corporate bottomline.
Netflix Inc predicted that it would return to customer growth this quarter, after a smaller-than-expected drop in subscribers in the second quarter. Its shares gained 8% in after-hours trading.
The S&P 500 gained 2.8% while the tech-heavy Nasdaq Composite added 3.1% on Tuesday.
A Reuters report that the European Central Bank was weighing a 50-basis-point rate hike at its Thursday meeting, double the hike many market participants had priced in, helped the euro rack up its biggest one-day percentage gain in a month.
Sources also told Reuters that Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, easing investors’ concerns about gas supply to Europe.
Markets still expect a large 75-basis-point interest rate rise from the Fed to rein in white-hot inflation.
FTSE100 live outlook prediction analysis for 20th July 2022
Well that all got quite bullish yesterday as recession fears eased a bit, along with the resumption of the gas flows in Nordstream. However as I am writing this inflation has just hit a 40 year high at 9.4% as the cost of living increase continues. That should trigger that 50bps rate rise shortly. Which will have no effect just increase peoples costs, so they spend less, so business put up prices to cover the short fall, pushing up inflation..... Oil remains around $100, gas is being stockpiled and flowing again so energy costs (the biggest driver of this inflation spike) will dip back. Not very transitory though!
Initially today we may well see a dip from the 7335 level as we have the key fib resistance here to begin with. Above this then R1 may well be seen later if the US continues to push up, and that is at the 7383 level. Once again the top of the Raff channels are in play for today and they are both around the 7400 area. The 20 day is 7390, while the 10 day is 7408. As such keep an eye on this area for a bearish assault.
The bears, having had their mauling yesterday will be looking to break below the daily pivot at 7278 today, though with things looking more positive on the charts we should see the bulls remain in charge for the moment. Should anyway! If the S&P can push on towards the 4000 level again then that should also help to keep the FTSE100 bullish.
Prior to a possible daily pivot test we have a green 30m coral with support at 7305. Initially I can see a dip down to here, though it may well go a bit further to test the pivot. Below the pivot though and the bears will feels a bit stronger and 7233 is the key fib, and just above the 30m 200ema at 7220. As such any drop down this far may well hold here as we also have S1 at 7215. Again, keep an eye on this area for support as well.
7232 is also the Hull MA on the 2h chart, and would be the first test of that since it went bullish, so again, another support to lend weight to this area. The 10d Raff channel has also started to head back up again.
S&P500
A decent rise and broke above the 3905 level which opens up the possibility for a test of the 4000 level before too long. As with the FTSE100, the charts are positive as earnings are coming in above expectations. Support to watch is at the 3920 area where we have the 30m coral now green, and then the daily pivot below that at 3906. For resistance, 3980 is R1, then 3991 for the 10d Raff, with the 20d just above that at 4000. If it gets exceptionally bullish again then R2 is at 4019. Buy the dip for the moment!
Good luck today.
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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.
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Telegram live trading room and webinar group membership for discussion and realtime trade updates

FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The FTSE100 rose yesterday as a buoyant global mood and strong gains by banks and consumer staples offset fears of a big interest rate hike next month after stronger-than-expected jobs data. A positive break above 7300 bodes well though there is a risk its just a dead cat bounce. The blue-chip index reversed early losses and closed 1% higher, while the FTSE 250 index advanced 1.4%.

Britain's unemployment rate held at 3.8pc in the three months to May and the number of people in work rose by the most since the middle of 2021, data showed, suggesting the cost-of-living squeeze has not yet hit demand for staff.

Traders were pricing in a 90.4pc chance of an aggressive 50 basis point rate hike next month, with consumer prices and retail sales data due later this week likely offering fresh clues on inflation and the health of the British consumer.

Stocks extended a rally Wednesday amid a retreat in the dollar and speculation that the worst of this year’s equity rout may be over.

Technology shares fueled a climb of more than 1.5% in a gauge of Asian equities after the S&P 500’s biggest jump since June. European futures pushed higher and US contracts were in the green too, encouraged by a Netflix Inc. surge in extended trading on a smaller-than-expected subscriber loss.

Asian shares extended a global rally on Wednesday as strong U.S. corporate earnings and the expected resumption of Russian gas supply to Europe helped lift sentiment and ease fears of a recession, while the dollar was mired near two-week lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan surged 1.1% in early Asia trade, driven by a 1.5% jump in resources-heavy Australia, a 1.1% gain in South Korean shares and 1.5% jump in Hong Kong stocks. Japan’s Nikkei surged 2.1%.

S&P 500 futures rose 0.3%, while Nasdaq futures firmed 0.4%.

U.S. stocks closed with sharp gains on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering respite to investors worried about higher inflation and Federal Reserve rate hikes denting the corporate bottomline.

Netflix Inc predicted that it would return to customer growth this quarter, after a smaller-than-expected drop in subscribers in the second quarter. Its shares gained 8% in after-hours trading.

The S&P 500 gained 2.8% while the tech-heavy Nasdaq Composite added 3.1% on Tuesday.

A Reuters report that the European Central Bank was weighing a 50-basis-point rate hike at its Thursday meeting, double the hike many market participants had priced in, helped the euro rack up its biggest one-day percentage gain in a month.

Sources also told Reuters that Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, easing investors’ concerns about gas supply to Europe.

Markets still expect a large 75-basis-point interest rate rise from the Fed to rein in white-hot inflation.

FTSE100 live outlook prediction analysis for 20th July 2022

Well that all got quite bullish yesterday as recession fears eased a bit, along with the resumption of the gas flows in Nordstream. However as I am writing this inflation has just hit a 40 year high at 9.4% as the cost of living increase continues. That should trigger that 50bps rate rise shortly. Which will have no effect just increase peoples costs, so they spend less, so business put up prices to cover the short fall, pushing up inflation..... Oil remains around $100, gas is being stockpiled and flowing again so energy costs (the biggest driver of this inflation spike) will dip back. Not very transitory though!

Initially today we may well see a dip from the 7335 level as we have the key fib resistance here to begin with. Above this then R1 may well be seen later if the US continues to push up, and that is at the 7383 level. Once again the top of the Raff channels are in play for today and they are both around the 7400 area. The 20 day is 7390, while the 10 day is 7408. As such keep an eye on this area for a bearish assault.

The bears, having had their mauling yesterday will be looking to break below the daily pivot at 7278 today, though with things looking more positive on the charts we should see the bulls remain in charge for the moment. Should anyway! If the S&P can push on towards the 4000 level again then that should also help to keep the FTSE100 bullish.

Prior to a possible daily pivot test we have a green 30m coral with support at 7305. Initially I can see a dip down to here, though it may well go a bit further to test the pivot. Below the pivot though and the bears will feels a bit stronger and 7233 is the key fib, and just above the 30m 200ema at 7220. As such any drop down this far may well hold here as we also have S1 at 7215. Again, keep an eye on this area for support as well.

7232 is also the Hull MA on the 2h chart, and would be the first test of that since it went bullish, so again, another support to lend weight to this area. The 10d Raff channel has also started to head back up again.

S&P500
A decent rise and broke above the 3905 level which opens up the possibility for a test of the 4000 level before too long. As with the FTSE100, the charts are positive as earnings are coming in above expectations. Support to watch is at the 3920 area where we have the 30m coral now green, and then the daily pivot below that at 3906. For resistance, 3980 is R1, then 3991 for the 10d Raff, with the 20d just above that at 4000. If it gets exceptionally bullish again then R2 is at 4019. Buy the dip for the moment!

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