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Bulls on the back foot as August weakens | Dip and rise (possibly!) | 7170 7150 7120 support | 7200 7250 resistance

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

The pound fell to a three week low against the dollar, as the greenback received a boost from safe-haven demand with investors fretting about Afghanistan, China's plans to regulate the internet sector and the Delta variant which has forced some new lockdowns.

New Zealand identified its first COVID-19 case since February, prompting the government to announce new short-term lockdown measures. Japan expanded its virus emergency to seven more prefectures in an effort to stem infections which have reached a new record.

The pound hit its weakest level since July 26, falling 0.6pc on the day to $1.3749.

However a lower pound pushed up exporters listed on the FTSE 100, boosting the index 0.4pc.

FTSE 100 live outlook prediction analysis for 18th August 2021

We have another decent dividend today (20.48 points) which will help underpin the bulls for this session. We got the drop back last night to the 30m chart support at 7145 which held well and has seen an overnight rise to the 7200 level, and the bulls will be looking to break past the 7220 recent high as that opens up 7250. It's possible that this leg may well get as far at 7350, as we held the daily support at 7110 well Monday and Tuesday. The bottom of the Raff channels and the 25ema were very well defended.

Initially the bulls will be looking to break 7200 as we have R1 and the key fib here. If the bears do appear here then we should get a drop down to the 2h support level at 7173, and I would expect that to hold today.

If the bears break that then the daily pivot at 7154 is the next main support, with the 7120 level below that were we have S1 and the recent low. I am not expecting us to get that low though. The 30m coral remains green with 7166 as support on that now, and we are also back above the 200ema at 7172. The bulls will certainly try and defend this cluster of supports.

The S&P500 isn't quite looking so bullish as the 2 hour chart on that remains bearish with 4464 resistance from both the Hull MA and the coral line which is red. As such the bulls will need to break this level, whilst maintaining a defence of the 4445 level where we have the daily pivot. Should they break higher then that bodes well for a lot more upside. The bottom of the 10d Raff channel is at 4423 should the bears break it down, and S1 at 4413 would be their target. Its up to the bulls today really and they need to come out fighting.

The Dax looks good for a drop down to the pivot, green coral and 200ema at 15880 initially, and has resistance to start with at 15981. The 2h chart is also bearish to start with with 15950 resistance so we may well get an initial drop on that to start with today as well.

So, thinking a dip and rise again for today, similar to yesterday and the bulls will not want to throw away the rise from 7110 from yesterday. Not sure it will last till the end of the week though as the tapering talk could drive the S&P down a bit. Good luck today.

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Asian Session

Asian stocks rose Wednesday and U.S. equity futures edged up as investors assessed the economic recovery and risks from the resurgent coronavirus. The dollar trimmed an advance.

MSCI Inc.’s gauge of Asia-Pacific shares was on course to snap a four-day losing streak, with Japan, China and Hong Kong posting gains. U.S. equity contracts reversed a decline and turned higher. Overnight, the S&P 500 posted the largest retreat in a month, while the Nasdaq 100 also fell.

Treasuries were little changed ahead of the release of the latest Federal Reserve minutes amid a highly uncertain outlook for yields. Traders are evaluating the spread of the delta virus variant, the prospect of reduced stimulus support and whether elevated inflation will prove transitory.

New Zealand’s dollar was whipsawed by its central bank, which left interest rates unchanged but signaled an intention to tighten policy soon. The decision was complicated by a snap national virus lockdown.

The virus and worries that economic growth is peaking are among the risks for global stocks after a 90% climb from last year’s pandemic lows. The Jackson Hole symposium next week -- the Fed’s most-prominent annual conference -- may offer clues on when and how the central bank will taper bond purchases.  [Bloomberg]

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