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Bulls on the back foot as 7300 slips away | 7240 7213 7150 support | 7279 7298 resistance

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

Another fairly flat day on the FTSE100 despite the budget, with the price hovering around the 7250 area for most of the day. The S&P500 had a modest drop off the 4585 level but the bulls defended the 4550 level. The main take away from the budget is that as expected they are going to use inflation to inflate the Covid derived debt away.

With a budget that increased wages, cut taxes for low income households and pumped investment into public services, Sunak on Wednesday laid out plans to add £75 billion of stimulus across the next six years.  The spending spree will overheat the economy, with growth running above capacity for the next three years. That will drive up inflation but dramatically shrink borrowing, according to the Office for Budget Responsibility.

Asian stocks fell Thursday amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy. Commodities including aluminum, iron ore and oil dropped.

Shares slipped in Japan and China and were little changed in South Korea, where Samsung Electronics Co.’s third-quarter profit exceeded estimates. U.S. futures edged up after the tech-heavy Nasdaq 100 touched an intraday record and the S&P 500 dipped but stayed in sight of all-time highs.

FTSE 100 live outlook prediction analysis for 28th October 2021

The FTSE100 has been fairly static recently really, and we may well just be seeing consolidation on this and the S&P500 before the next leg up. On the S&P the key support is at the 4550 level as that was previous resistance (now turns into support) and a break of that will likely see a slide down to the bottom of the 10 day Raff channel at 4505. That said the bulls are likely to defend this 4550 level as much as possible with a possible stop hunt to just below always in the wings too!

The daily charts remain bullish across the board so the general trend for the moment remains bullish with a buy the dip playing out. The FTSE100 bulls are certainly defending well at the moment and the 7250 level remains the line in the sand, and we have the green 2h coral here for today. A break of that will likely see a drop down towards 7200 though and possibly even 7150 where we have the bottom of the 20 day Raff channel. I am not expecting us to go that low today though!

Initial resistance is at the daily pivot at 7262 and we also have the red 30m coral here which we dropped off twice yesterday. The 3rd test could see a push through that though and if so then R1 at 7279 is next up, with possibly a test of the 7300 level in the offing. R2 is just below at 7298 for today, and with the top of the 10day Raff also here we could see the bears have a crack here. A possible overshoot is factored into my order (as we have R3 at 7315) but I think around this 7300 area is a decent resistance level.

Should the bulls break above 7315 then we are well on our way towards the 7500+ level for the year end. The only slight spanner in the works is that maybe we came up a bit too far too quickly, which is why we are currently in this consolidation pages to just cool off the overbought indictors. The US bulls will certainly be keen to defend the 4500 on any sizeable drop on the S&P.

So, looking at range between the 7240 and 7300 areas today really. Earnings from Apple and Amazon later likely to put a bit of movement into the US markets, with the FTSE following.

Good luck today.

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