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Bulls struggling at 7200 | trending day or small rise and dip | 7070 7030 7000 support | 7142 resistance

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

Sterling rose to $1.3760 against the US dollar in afternoon trading, rising from $1.3726 which was the lowest since July 23. It comes as inflation fell in line with the Bank of England's 2pc target last month, a slowdown that economists said was most likely a blip as the reopening of the economy after lockdown drives prices higher.

Economists polled by Reuters had expected a 2.3pc rise in consumer prices following a 2.5pc rise in June.

House prices jumped 13.2pc in the year to June, the highest rate of growth since November 2004. The record growth reflected the market frenzy as buyers sought to transact before the stamp duty holiday was tapered at the end of the month.  It was up from 8.6pc in May, and brought the average house price to £266,000, which is £31,000 higher than a year ago.

FTSE 100 live outlook prediction analysis for 19th August 2021

The bears are gaining control and we have had some key supports fail now. However we may well see a bit of a relief rally this morning to back test the broken supports before more downside over the next 24 hours. The bulls failed to break above the 7220 level, and tried (and failed) again yesterday to hold above 7200.

The S&P500 broke below the 4400 level and has remained below overnight, which has got the 2h chart bearish with 4440 resistance locked in now. Any possible rally to this area therefore looks like a decent short fo a slide down towards the 4370 or lower level, possibly S2 at 4345.

For the FTSE100 the 30m chart has good looking resistance at the 7140 area with the daily pivot, red coral and 200ema all here, along with 2h resistance at 7149 (and steadily getting lower) so again, should we get any sort of climb towards this area then a short here is worth a go. The dividends are out of the way now, which helped to underpin the climb towards the 7220 level, and the bears may well take advantage of the low volume, traditionally weak August period now.

If the bears break S1 though then we could be on for a trending day, with 7032 S2 next up as the likely target. That then of course also brings 7000 into view, and the bulls will be keen to defend that. S3 though is at 6967 and a drop to this level would be pretty bearish as that's a long way below the Raff channels which have 7100 support today. As I am writing this we are breaking below them though and testing S1.

I can't see the bulls pushing much past the 7145 level today, but if they did then 7185 is the next resistance level of note as we have R1 and the key fib here. Again, worth a short here if it is seen.

So, expecting a rise and dip again today really, watching 7145ish as the main resistance, 7080, 7030 and 7000 as the main supports. Good luck today.

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Asian Session

Asian stocks fell to the lowest this year, crude oil sank and the dollar rallied on a weakening global growth outlook and the prospect of reduced Federal Reserve stimulus.

MSCI Inc.’s gauge of Asia-Pacific shares fell more than 1%, with Hong Kong equities leading the slide as Chinese technology stocks struggled, including a plunge in Alibaba Group Holding Ltd. to a record low. U.S. futures wavered after the S&P 500 and Nasdaq 100 retreated overnight.

Stocks are under pressure after the latest minutes showed most Fed officials agreed they could start slowing the pace of bond purchases later this year given the progress made toward inflation and employment goals.

A gauge of the dollar touched the highest since November 2020 and China’s yuan advanced to its strongest level in more than five years against a basket of trading-partner currencies. Treasuries were little changed. Commodities like oil, copper and iron ore slumped, highlighting demand risks from the resurgence in Covid-19. Commodity-linked currencies including the New Zealand and Australian dollars dipped.

The global equity rally has paused as investors consider the likely time-line for a reduction in the Fed’s massive bond purchases as well as the challenges for economic reopening from the fast-spreading delta coronavirus variant. The Jackson Hole symposium next week, the U.S. central bank’s most prominent conference, may provide further clues on the stimulus outlook. [Bloomberg]

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