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Bulls remain in charge for the moment with 7500 7531 7555 resistance | 7426 support

#1 · 5th January 2022, 10:13 am

Quote from Nick on 5th January 2022, 10:13 am
FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Shares in airlines rose yesterday amid growing evidence that the omicron variant is not as deadly as had been feared, raising hopes of a return to normality. British Airways owner IAG topped the FTSE 100, surging over 11pc.

The FTSE 100 gained 1.6pc, while the mid-cap FTSE 250 closed nearly 1.8pc higher. The upbeat sentiment was seen elsewhere in Europe too. The pan-European Stoxx 600 index ended 0.8pc higher at 494.02 points, hitting a record high for a second consecutive session.

Widespread optimism and an improved outlook on global oil demand boosted crude prices despite Opec+ members raising output. The benchmark Brent crude ticked above $80 a barrel after the producing countries approved a 400,000 barrel-a-day increase in production scheduled for February, as expected.

Asian Session

Most stocks in Asia dropped Wednesday with technology share declining as investors fret about interest rates increases. Treasuries held losses.

An index of tech shares in Hong Kong fell to the lowest since May 2020 as firms backed by Tencent Holdings Ltd. came under pressure as it pares investment in the sector amid Beijing’s regulatory crackdown. South Korea and China also dropped along with U.S. futures. Japan edged higher.

The Nasdaq 100 underperformed amid a selloff in tech names as Treasury yields climbed for a second day Tuesday. European contracts were little changed.
Treasuries were steady after yields rose amid increasing conviction the Federal Reserve will raise rates at least three times beginning in May to counter price pressures. The yield curve steepened as yields on long maturities also climbed amid heavy supply of new corporate bonds. The dollar was little changed, while the yen traded near its lowest since January 2017.

Rapid Spread

The fast-spreading omicron variant now accounts for 95% of all U.S. Covid cases, the Centers for Disease Control and Prevention said, as the country logged one million new infections. In China, almost two weeks of lockdown is wearing on the 13 million residents of Xi’an as food and medical shortages mount. Goldman Sachs analysts said they see China’s strict border controls — amounting to a virtual closure of the country — lasting through most of 2022. Meanwhile, the U.S. advised against travel to Singapore saying the Covid level there was “unknown”; Prime Minister Boris Johnson said the U.K. could ride out the omicron wave without tightening restrictions; and Hong Kong logged its first Covid case from an unknown source in almost three months.

FTSE 100 live outlook prediction analysis for 5th January 2022

Interesting little move up to 7530 before the bears appeared suggesting a bit of a bull trap there with a failed breakout. Same for the S&P as it popped to the 4815 level then dropped quite fast. We may well see a bit of an initial follow through upwards though this morning before a drop back down, just to stop out a few of the bulls that piled in at the start of the month. Just a reminder that seasonally it's bullish till mid January, roughly speaking.

We have the first red 30m coral on the FTSE100 for a while with resistance from that at 7500 so this is the first resistance level of note this morning. Above that then yesterdays high at 7530, and then the top of the 10 day Raff cannel and R1 at 7550 - a level that will be worth a short if we were to get that high today. Daily resistance is also at the 7558 level so this area is looking fairly key. Worth a short at 7550 too.

The S&P 2 hour chart has gone bearish now with 4794 showing as resistance and this ties in with that now red 30m coral and the daily pivot also here - as such an early rise then drop down from here would fit very well, dropping to the S2 level and 4750 area. If we did drop that low then the bulls will be keen to defend this level so a decent spring back up from here would also fit in well.

For the FTSE, if the bears do manage to get a bit of control from the 7500 level then we should see a decline to the 7425 area where we have the key fib and S1 for today. 7427 is also the 2h coral (now green) so as a support area it looks pretty decent. A break of this area though and then the recent low at 7360 is back on the radar. We also have the bottom of the 10 day Raff channel at 7348. Again, if we see this area then a long here is worth a go though I am not thinking we drop down to 7350 today. Never say never though!

Tiny 0.55 dividend today so nothing to factor in for that really. The bigger event with be the Fed minutes at 7pm. That may well give some more clues as to rate hikes (or not) so expect a bit of chop around then on the FTSE100 futures, and also the US markets.

So, possibly a rise and dip then another rise to palsy out today. I am watching the S&P quite closely for clue as the bulls will be keen to get it back above the 4800 level and a failure to do so will see a side down to the 4750 level. The FTSE100 should mirror this with a drop off the 7500 to 7530 area down to the 7425 area, and then a bounce here. If these levels break though then it will be worth trading that break for a push to the higher resistance 75550, and the lower support 7360.

Good luck today.

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

Shares in airlines rose yesterday amid growing evidence that the omicron variant is not as deadly as had been feared, raising hopes of a return to normality. British Airways owner IAG topped the FTSE 100, surging over 11pc.

The FTSE 100 gained 1.6pc, while the mid-cap FTSE 250 closed nearly 1.8pc higher. The upbeat sentiment was seen elsewhere in Europe too. The pan-European Stoxx 600 index ended 0.8pc higher at 494.02 points, hitting a record high for a second consecutive session.

Widespread optimism and an improved outlook on global oil demand boosted crude prices despite Opec+ members raising output. The benchmark Brent crude ticked above $80 a barrel after the producing countries approved a 400,000 barrel-a-day increase in production scheduled for February, as expected.

Asian Session

Most stocks in Asia dropped Wednesday with technology share declining as investors fret about interest rates increases. Treasuries held losses.

An index of tech shares in Hong Kong fell to the lowest since May 2020 as firms backed by Tencent Holdings Ltd. came under pressure as it pares investment in the sector amid Beijing’s regulatory crackdown. South Korea and China also dropped along with U.S. futures. Japan edged higher.

The Nasdaq 100 underperformed amid a selloff in tech names as Treasury yields climbed for a second day Tuesday. European contracts were little changed.
Treasuries were steady after yields rose amid increasing conviction the Federal Reserve will raise rates at least three times beginning in May to counter price pressures. The yield curve steepened as yields on long maturities also climbed amid heavy supply of new corporate bonds. The dollar was little changed, while the yen traded near its lowest since January 2017.

Rapid Spread

The fast-spreading omicron variant now accounts for 95% of all U.S. Covid cases, the Centers for Disease Control and Prevention said, as the country logged one million new infections. In China, almost two weeks of lockdown is wearing on the 13 million residents of Xi’an as food and medical shortages mount. Goldman Sachs analysts said they see China’s strict border controls — amounting to a virtual closure of the country — lasting through most of 2022. Meanwhile, the U.S. advised against travel to Singapore saying the Covid level there was “unknown”; Prime Minister Boris Johnson said the U.K. could ride out the omicron wave without tightening restrictions; and Hong Kong logged its first Covid case from an unknown source in almost three months.

FTSE 100 live outlook prediction analysis for 5th January 2022

Interesting little move up to 7530 before the bears appeared suggesting a bit of a bull trap there with a failed breakout. Same for the S&P as it popped to the 4815 level then dropped quite fast. We may well see a bit of an initial follow through upwards though this morning before a drop back down, just to stop out a few of the bulls that piled in at the start of the month. Just a reminder that seasonally it's bullish till mid January, roughly speaking.

We have the first red 30m coral on the FTSE100 for a while with resistance from that at 7500 so this is the first resistance level of note this morning. Above that then yesterdays high at 7530, and then the top of the 10 day Raff cannel and R1 at 7550 - a level that will be worth a short if we were to get that high today. Daily resistance is also at the 7558 level so this area is looking fairly key. Worth a short at 7550 too.

The S&P 2 hour chart has gone bearish now with 4794 showing as resistance and this ties in with that now red 30m coral and the daily pivot also here - as such an early rise then drop down from here would fit very well, dropping to the S2 level and 4750 area. If we did drop that low then the bulls will be keen to defend this level so a decent spring back up from here would also fit in well.

For the FTSE, if the bears do manage to get a bit of control from the 7500 level then we should see a decline to the 7425 area where we have the key fib and S1 for today. 7427 is also the 2h coral (now green) so as a support area it looks pretty decent. A break of this area though and then the recent low at 7360 is back on the radar. We also have the bottom of the 10 day Raff channel at 7348. Again, if we see this area then a long here is worth a go though I am not thinking we drop down to 7350 today. Never say never though!

Tiny 0.55 dividend today so nothing to factor in for that really. The bigger event with be the Fed minutes at 7pm. That may well give some more clues as to rate hikes (or not) so expect a bit of chop around then on the FTSE100 futures, and also the US markets.

So, possibly a rise and dip then another rise to palsy out today. I am watching the S&P quite closely for clue as the bulls will be keen to get it back above the 4800 level and a failure to do so will see a side down to the 4750 level. The FTSE100 should mirror this with a drop off the 7500 to 7530 area down to the 7425 area, and then a bounce here. If these levels break though then it will be worth trading that break for a push to the higher resistance 75550, and the lower support 7360.

Good luck today.

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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 FTSE 100, 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 FTSE, DAX, Gold and S&P.
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

Keep up to date with new content, free sign up below with just your email address

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