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Can the UK get more optimistic | 6890 6928 7029 resistance | 6800 6769 support

#1 · 17th October 2022, 10:24 am

Quote from Nick on 17th October 2022, 10:24 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Asian equities fell while major currencies made gains against the dollar in a cautious open to the week following further weakness on Wall Street and a defiant message to the world from China’s Communist Party congress.
Stocks dropped in Japan, Australia and Hong Kong, where technology companies led declines. Contracts for the S&P 500 and Nasdaq 100 rose after tumbling Friday, when Treasury yields climbed as year-ahead inflation expectations increased. US Yields trimmed that move in Asia on Monday.
Asian share markets slipped on Monday following another drubbing for Wall Street as investors braced for a further drastic tightening in global financial conditions, with all the risks of recession that brings.
Concerns about financial stability added to the corrosive mix with all eyes on UK bonds, now that the Bank of England's (BoE's) emergency buying spree is over.
Prime Minister Liz Truss' decision to fire her finance minister might help reassure investors, but her own fate is unclear with media reporting Tory lawmakers will try and replace her this week.
BoE Governor Andrew Bailey warned over the weekend that interest rates might now have to rise by more than thought just a couple of months ago.
Sterling was quoted up 0.4% at $1.1219 , but off the early high with trading sparse in Asia. FTSE futures fell 0.5%, and EUROSTOXX 50 futures 0.6%.
S&P 500 futures edged up 0.4% after Friday's sharp retreat, while Nasdaq futures added 0.3%. While the S&P is an eye-watering 25% off its peak, BofA economist Jared Woodard warned the slide was not over given the world was transitioning from two decades of 2% inflation to a time of something more like 5% inflation.
A red-hot U.S. consumer price report and rising inflation expectations have markets fully expecting the Federal Reserve to hike rates by 75 basis points next month, and likely by the same again in December.
A host of Fed policymakers are speaking this week, so there will be plenty of opportunity for hawkish headlines. The earnings season also continues with Tesla Inc (TSLA.O), Netflix (NFLX.O) and Johnson & Johnson (JNJ.N) reporting, among others.
Goldman Sachs Group Inc (GS.N) also reports this week and the WSJ reported the investment bank plans to restructure its biggest businesses into three divisions.
In China, the Communist Party Congress is expected to grant a third term to President Xi Jinping, while there could be a reshuffle of top economic roles as incumbents are near retirement age or term-limits.
In currency markets, the dollar remains king as investors price in U.S. rates peaking around 5%.
Oil prices were trying to bounce, after sinking more than 6% last week as fears of a demand slowdown outweighed OPEC's plans to cut output. Brent firmed 64 cents to $92.27 a barrel, while U.S. crude rose 55 cents to $86.16 per barrel.
Defiant Xi
President Xi Jinping had a clear message for those who want to thwart China’s rise: You will fail. In a two-hour speech to kick off the Communist Party’s congress, Xi let the world know that China wouldn’t change course, even as it faces “dangerous storms” in a more hostile world. Instead, he declared the “rejuvenation of the Chinese nation is now on an irreversible historical course.” He signaled no change in direction for two main risk factors dragging down China’s economy — strict Covid rules, which he briefly praised, and housing market policies.
FTSE100 live outlook prediction analysis for 17th October 2022
Probably going to be another volatile week as the new Chancellor settles in, and starts to unwind the shambles that was the mini-budget. So far the markets look to be more receptive to Jeremy Hunt so will have to see how it plays out now. The pound has already rallied a bit this morning, and there is an interesting article in Bloomberg this morning saying that now is time to start thinking about buying the dip on UK markets. I'd extend that out to the S&P500 as well in case the traditional seasonality plays out which sees the strength kick in about now for a rise towards the end of the year.
Initially today we are on the 30m resistance at 6855 so we could see a dip and rise play out today, with the 6800 getting tested but then setting up a bounce. The 2h chart is bullish to start with this morning and has coral support at 6845, and then the Hull support at 6830 - though we have already tested that the first time late on Friday and got a small bounce. Out of hours though so will be interesting to see if it holds in hours.
An overshoot off the 6830 down to that 6800 and then climb towards the 6880 level would make sense. Below 6800 then the bear should be able to take it down to the S1 and key fib level at 6775/6769 which may well hold. We could see a bull Monday kick in today too.
For the bulls, they will be looking for a rise to the 6885 level as we have the 200ema 30m here, and also the key fib. Above that then R1 at 6928 would likely be seen. I don't think they will be able to push towards the round number of 7000 today, but then it does depend how the markets react to the political mess (sorry, situation) that we are in at the moment and if the ship can be stabilised.
Am definitely thinking that buying the dip is starting to become the preferred play now though, especially how it was rallied so hard off 6700 on Thursday last week. The Raff channels are heading down still, but we are now at the mid point of both of them, so could start to see the worm turn.
S&P500
The S&P500 also looks like a buy the dip play is right for today, with the 3582 level looking like decent support. The bulls will need to break above the pivot and 200ema at 3629, as that will allow a test of the 30m coral at 3660, with 3677 above that. 3596 is also the green 2h coral and that line held well on Friday to get a small bounce (when it was at 3590).
Good luck today.
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If you would like more detailed analysis for FTSE100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Asian equities fell while major currencies made gains against the dollar in a cautious open to the week following further weakness on Wall Street and a defiant message to the world from China’s Communist Party congress.

Stocks dropped in Japan, Australia and Hong Kong, where technology companies led declines. Contracts for the S&P 500 and Nasdaq 100 rose after tumbling Friday, when Treasury yields climbed as year-ahead inflation expectations increased. US Yields trimmed that move in Asia on Monday.
Asian share markets slipped on Monday following another drubbing for Wall Street as investors braced for a further drastic tightening in global financial conditions, with all the risks of recession that brings.

Concerns about financial stability added to the corrosive mix with all eyes on UK bonds, now that the Bank of England's (BoE's) emergency buying spree is over.

Prime Minister Liz Truss' decision to fire her finance minister might help reassure investors, but her own fate is unclear with media reporting Tory lawmakers will try and replace her this week.

BoE Governor Andrew Bailey warned over the weekend that interest rates might now have to rise by more than thought just a couple of months ago.

Sterling was quoted up 0.4% at $1.1219 , but off the early high with trading sparse in Asia. FTSE futures fell 0.5%, and EUROSTOXX 50 futures 0.6%.

S&P 500 futures edged up 0.4% after Friday's sharp retreat, while Nasdaq futures added 0.3%. While the S&P is an eye-watering 25% off its peak, BofA economist Jared Woodard warned the slide was not over given the world was transitioning from two decades of 2% inflation to a time of something more like 5% inflation.

A red-hot U.S. consumer price report and rising inflation expectations have markets fully expecting the Federal Reserve to hike rates by 75 basis points next month, and likely by the same again in December.

A host of Fed policymakers are speaking this week, so there will be plenty of opportunity for hawkish headlines. The earnings season also continues with Tesla Inc (TSLA.O), Netflix (NFLX.O) and Johnson & Johnson (JNJ.N) reporting, among others.

Goldman Sachs Group Inc (GS.N) also reports this week and the WSJ reported the investment bank plans to restructure its biggest businesses into three divisions.

In China, the Communist Party Congress is expected to grant a third term to President Xi Jinping, while there could be a reshuffle of top economic roles as incumbents are near retirement age or term-limits.

In currency markets, the dollar remains king as investors price in U.S. rates peaking around 5%.

Oil prices were trying to bounce, after sinking more than 6% last week as fears of a demand slowdown outweighed OPEC's plans to cut output. Brent firmed 64 cents to $92.27 a barrel, while U.S. crude rose 55 cents to $86.16 per barrel.

Defiant Xi
President Xi Jinping had a clear message for those who want to thwart China’s rise: You will fail. In a two-hour speech to kick off the Communist Party’s congress, Xi let the world know that China wouldn’t change course, even as it faces “dangerous storms” in a more hostile world. Instead, he declared the “rejuvenation of the Chinese nation is now on an irreversible historical course.” He signaled no change in direction for two main risk factors dragging down China’s economy — strict Covid rules, which he briefly praised, and housing market policies.

FTSE100 live outlook prediction analysis for 17th October 2022

Probably going to be another volatile week as the new Chancellor settles in, and starts to unwind the shambles that was the mini-budget. So far the markets look to be more receptive to Jeremy Hunt so will have to see how it plays out now. The pound has already rallied a bit this morning, and there is an interesting article in Bloomberg this morning saying that now is time to start thinking about buying the dip on UK markets. I'd extend that out to the S&P500 as well in case the traditional seasonality plays out which sees the strength kick in about now for a rise towards the end of the year.

Initially today we are on the 30m resistance at 6855 so we could see a dip and rise play out today, with the 6800 getting tested but then setting up a bounce. The 2h chart is bullish to start with this morning and has coral support at 6845, and then the Hull support at 6830 - though we have already tested that the first time late on Friday and got a small bounce. Out of hours though so will be interesting to see if it holds in hours.

An overshoot off the 6830 down to that 6800 and then climb towards the 6880 level would make sense. Below 6800 then the bear should be able to take it down to the S1 and key fib level at 6775/6769 which may well hold. We could see a bull Monday kick in today too.

For the bulls, they will be looking for a rise to the 6885 level as we have the 200ema 30m here, and also the key fib. Above that then R1 at 6928 would likely be seen. I don't think they will be able to push towards the round number of 7000 today, but then it does depend how the markets react to the political mess (sorry, situation) that we are in at the moment and if the ship can be stabilised.

Am definitely thinking that buying the dip is starting to become the preferred play now though, especially how it was rallied so hard off 6700 on Thursday last week. The Raff channels are heading down still, but we are now at the mid point of both of them, so could start to see the worm turn.

S&P500
The S&P500 also looks like a buy the dip play is right for today, with the 3582 level looking like decent support. The bulls will need to break above the pivot and 200ema at 3629, as that will allow a test of the 30m coral at 3660, with 3677 above that. 3596 is also the green 2h coral and that line held well on Friday to get a small bounce (when it was at 3590).

Good luck today.

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 FTSE100, 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 FTSE100, DAX40, Gold and S&P500.
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