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Bulls need to defend again | 7108 7070 support | 7170 7200 resistance | Job vacancies hit record 1m

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

The FTSE 100 dropped 1pc yesterday, after new data out of China showed the world's second-largest economy stuttered in the face of resurgent Covid cases, global shortages and severe flooding in July.

Industrial production growth slipped from 8.3pc year-on-year in June to 6.4pc, the weakest pace in almost a year, while retail sales slowed to 8.5pc in July, down from 12.1pc. Industrial output grew just 0.3pc compared to the previous month, the worst in seven years except for last year’s Covid shutdown. The sharp slowdown sparked concern among investors that the global recovery was slowing.

FTSE 100 live outlook prediction analysis for 17th August 2021

As a positive for the bulls they defended the bottom of the 20 day Raff channel yesterday at 7120, however the bears do seem to have the upper hand at the moment. The 2 hour coral line has changed to red with resistance at 7205 for now and as such a short here is worth a go if seen. 7225 remains the major line in the sand that the bulls would have to break to push up towards the 7250 and 7350 levels.

For today though we may well see some more downside towards the 25ema on the daily chart at 7110. We also have employment data out later, and the last larger dividend tomorrow of 20 points for a while. These may help the bulls in the near term.

Below 7110 then I would ultimately expect a drop down towards the S3 level 7025 and with gold spiking up towards 1800 again (after that stop hunting move down to 1700 last week) there is a move to safe havens again. 7071 is S2 though so a brief pause of any selling here may well play out, especially if we just have an overshoot of the 7100 level and its a bear trap.

With the S&P rising from the 4437 level yesterday the charts for that looks more bullish then the FTSE ones! 4465 is initial support with the green coral here on the 30m and also the daily pivot. A break of yesterdays low however and the picture will change quite quickly as the bears looks to drive it lower. 4435 is the key fib and tying in with the double bottom could see a bounce otherwise the 4421 and 4405 levels are next up. If the bulls do regain some control then 4508 remains a viable upside target as we have R2 here, and near the top of the 10 day Raff channel.

That said I wouldn't be surprised to see a bit of bear Tuesday on the FTSE100 today, and a weaker day ahead. I think the bulls will struggle to push past the 7175 level today and we could just range between 7110 and 7170 today - possibly building a base for a push up tomorrow. The bulls are going to have to go for it to push past the 7200 level anyway, and it will be inserting to see if they can continue to defend the bottom of the Raff channels around this 7100 level.

Good luck today.

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Asian Session

Most Asian stocks fell Tuesday as concerns about the impact of the delta coronavirus variant on global growth eclipsed a record-breaking run in the S&P 500. The dollar and Treasuries rose.

Shares were lower in Australia, Hong Kong and China. U.S. equity futures edged down and European contracts wavered. The S&P 500 closed at another all-time high overnight -- doubling from its pandemic low in March 2020 -- with health-care and utility companies advancing.

Signs of a slowing Chinese recovery, Beijing’s regulatory clampdown and mobility curbs to fight the delta strain are souring the mood in Asia. In New Zealand, officials said they are investigating a Covid-19 case, triggering a tumble in the currency and bond yields. Australia’s dollar slid after the central bank signaled it’s ready to act if lockdowns take a bigger economic toll.

Treasury yields declined, with traders awaiting an address by Federal Reserve Chair Jerome Powell on Tuesday and the Jackson Hole symposium in late August for clues on when and how the Fed might taper stimulus.

Traders continue to grapple with the risk of slower growth, the impact of elevated inflation and the prospect of reduced central bank support. While the S&P 500 is on track for one of its calmest months, a measure of implied volatility in VIX options has advanced for five out of seven weeks -- even as the Cboe Volatility Index kept falling -- pointing to lingering disquiet. [Bloomberg]

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