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Continued geo-political tensions | Friday pump but lower today | 7455 7474 resistance | 7346 support

#1 · 28th February 2022, 10:24 am

Quote from Nick on 28th February 2022, 10:24 am
FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Russia are certainly not having it all their own way and its not the easy invasion they envisaged. Continued geo-political tensions continue to drive volatile markets and will likely for the near term.

On Friday, the FTSE 100 all but wiped out losses from the recent sell-off as investors weighed up the long-term impact of war in Ukraine. The blue-chip index rose 3.9pc in a strong rebound, having dropped 3.9pc on Thursday as Russia launched an invasion of its neighbour. Russia-exposed miners including Evraz and Polymetal International were among the biggest risers, while financial stocks also helped to drive the recovery.

Equity futures slid Monday while sovereign bonds and crude oil surged amid heightened uncertainty after Western nations unveiled harsher sanctions on Russia for the invasion of Ukraine.

European contracts fell some 3.5%, Nasdaq 100 futures shed about 2.5% and those for the S&P 500 lost more than 2%. Oil and palladium jumped, with Brent again soaring above $100 a barrel on fears of commodity supply disruptions.

Rallies in a dollar gauge, gold and Treasuries underlined the demand for havens. The euro fell on worries about risks for Europe’s economy, which relies on Russian energy. An Asia-Pacific equity index dipped as Hong Kong struggled.

The stricter Western penalties further split commodity-rich Russia from global finance by seeking to prevent its central bank from using foreign reserves to blunt sanctions. They also exclude some Russian lenders from the SWIFT messaging system that underpins trillions of dollars worth of transactions.

Doubts are now growing about the Bank of Russia’s ability to backstop Russia’s financial system and the ruble, which sank nearly 30% in offshore trading. Russia temporarily banned non-residents from selling securities.

There’s speculation that monetary authorities may have to supplymarkets with dollars to fill holes in global banking created by the SWIFT step.

The escalating Ukraine conflict and more severe Western sanctions are roiling markets. The hostilities threaten to stoke inflation by imperiling flows of key resources such as wheat, natural gas, oil and metals, exacerbating the pandemic-era price pressures that were already weighing on world growth.

A key question is how all this may affect the Federal Reserve’s plan for a series of interest-rate hikes starting March. Markets now see smaller chances of an aggressive Fed liftoff, and anticipate just under six hikes in 2022.

Ukraine Resistance
Russia’s plans for Ukraine face rapidly rising costs due to delays caused by tougher-than-expected resistance from forces on the ground. A senior U.S. defense official said the U.S. had indications that Moscow had become frustrated by the invasion’s slow progress. Meanwhile officials from Kyiv agreed to meet Russian counterparts for talks at the Belarus border, hours after Russian President Vladimir Putin put the country’s nuclear forces on higher alert. Watch his justification for that move here. And U.S. citizens have been advised to consider leaving Russiaimmediately. Get all the latest updates on the crisis here.

Off Message
Western nations agreed to unleash new sanctions to further isolate Russia’s economy and financial system after initial penalties failed to persuade Putin to halt his invasion. A decision to penalize Russia’s central bank and exclude some of the country’s banks from the SWIFT messaging system, used for trillions of dollars’ worth of transactions around the world, was announced in a joint statement by the U.S., European Commission, France, Germany, Italy, U.K. and Canada. The EU is now discussing sanctioning some of Russia’s wealthiest tycoons.

FTSE 100 live outlook prediction analysis for 28th February 2022

Volatility looks set to continue apace and overnight we had a move down to test the 200ema on the daily again at 7220. That held well though and the futures got brought back up. Russia are not having the easy invasion they expected, and in fact the sanctions are already starting to have an effect as the rouble hits an all-time low and bank runs are starting. As per usual with these things it is the man on the street that suffers for the leaders folly. Of course there is the retaliatory option of Putin turning off the gas supplies to Europe - that will really ramp things up too.

Initially I am looking at a rise towards the 7455 daily pivot resistance level, and just below the key fib resistance at 7474. We may see a stutter in this area and another drop back before more upside later once the US opens. The dip overnight back down to the 4280 area has worked well for the S&P to undo some of the overbought RSI from the pump on Friday. That then paves the way for more upside to come without things getting too overheated.

At the end of the day the Western markets will be trying to rise just to prove to Putin that we are stronger and can enforce sanctions etc. They wont want the markets tanking as a result of his invasion. The wars are about the money just as much as the fighting. If Russia does get a bloody nose and has to withdraw from Ukraine it will have all gone very wrong for Putin. Just hope he doesn't push the big red button!

Anyway, above the 7474 level we are looking at the 7550 area again which was Friday high (and quite the bounce from 7220 overnight if that happened!). The 2h chart is still bullish and has 7333 as support from the Hull moving average.

That also ties in with the 30m support area at 7346 where we have the key fib and S1 for today. I wouldn't be surprised if we tested that today and I would like to see it hold for a push higher again. With that 2h at 7333 then this area does look to be worth a long.

However, should the markets go risk off and we see a break of this then a slide down to 7220 is likely. Below that then the bottom of the Raff channels come into play at 7160 (20day) and 7137 (10day). Dont think we will get that low but with the currently volatility then never rule anything out!

So, going to be another interesting day today. The war may well make the Fed a bit less hawkish as they look to support markets as well.

Good luck today and remain careful!

Recommended Broker

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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.

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Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.

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

Russia are certainly not having it all their own way and its not the easy invasion they envisaged. Continued geo-political tensions continue to drive volatile markets and will likely for the near term.

On Friday, the FTSE 100 all but wiped out losses from the recent sell-off as investors weighed up the long-term impact of war in Ukraine. The blue-chip index rose 3.9pc in a strong rebound, having dropped 3.9pc on Thursday as Russia launched an invasion of its neighbour. Russia-exposed miners including Evraz and Polymetal International were among the biggest risers, while financial stocks also helped to drive the recovery.

Equity futures slid Monday while sovereign bonds and crude oil surged amid heightened uncertainty after Western nations unveiled harsher sanctions on Russia for the invasion of Ukraine.

European contracts fell some 3.5%, Nasdaq 100 futures shed about 2.5% and those for the S&P 500 lost more than 2%. Oil and palladium jumped, with Brent again soaring above $100 a barrel on fears of commodity supply disruptions.

Rallies in a dollar gauge, gold and Treasuries underlined the demand for havens. The euro fell on worries about risks for Europe’s economy, which relies on Russian energy. An Asia-Pacific equity index dipped as Hong Kong struggled.

The stricter Western penalties further split commodity-rich Russia from global finance by seeking to prevent its central bank from using foreign reserves to blunt sanctions. They also exclude some Russian lenders from the SWIFT messaging system that underpins trillions of dollars worth of transactions.

Doubts are now growing about the Bank of Russia’s ability to backstop Russia’s financial system and the ruble, which sank nearly 30% in offshore trading. Russia temporarily banned non-residents from selling securities.

There’s speculation that monetary authorities may have to supplymarkets with dollars to fill holes in global banking created by the SWIFT step.

The escalating Ukraine conflict and more severe Western sanctions are roiling markets. The hostilities threaten to stoke inflation by imperiling flows of key resources such as wheat, natural gas, oil and metals, exacerbating the pandemic-era price pressures that were already weighing on world growth.

A key question is how all this may affect the Federal Reserve’s plan for a series of interest-rate hikes starting March. Markets now see smaller chances of an aggressive Fed liftoff, and anticipate just under six hikes in 2022.

Ukraine Resistance
Russia’s plans for Ukraine face rapidly rising costs due to delays caused by tougher-than-expected resistance from forces on the ground. A senior U.S. defense official said the U.S. had indications that Moscow had become frustrated by the invasion’s slow progress. Meanwhile officials from Kyiv agreed to meet Russian counterparts for talks at the Belarus border, hours after Russian President Vladimir Putin put the country’s nuclear forces on higher alert. Watch his justification for that move here. And U.S. citizens have been advised to consider leaving Russiaimmediately. Get all the latest updates on the crisis here.

Off Message
Western nations agreed to unleash new sanctions to further isolate Russia’s economy and financial system after initial penalties failed to persuade Putin to halt his invasion. A decision to penalize Russia’s central bank and exclude some of the country’s banks from the SWIFT messaging system, used for trillions of dollars’ worth of transactions around the world, was announced in a joint statement by the U.S., European Commission, France, Germany, Italy, U.K. and Canada. The EU is now discussing sanctioning some of Russia’s wealthiest tycoons.

FTSE 100 live outlook prediction analysis for 28th February 2022

Volatility looks set to continue apace and overnight we had a move down to test the 200ema on the daily again at 7220. That held well though and the futures got brought back up. Russia are not having the easy invasion they expected, and in fact the sanctions are already starting to have an effect as the rouble hits an all-time low and bank runs are starting. As per usual with these things it is the man on the street that suffers for the leaders folly. Of course there is the retaliatory option of Putin turning off the gas supplies to Europe - that will really ramp things up too.

Initially I am looking at a rise towards the 7455 daily pivot resistance level, and just below the key fib resistance at 7474. We may see a stutter in this area and another drop back before more upside later once the US opens. The dip overnight back down to the 4280 area has worked well for the S&P to undo some of the overbought RSI from the pump on Friday. That then paves the way for more upside to come without things getting too overheated.

At the end of the day the Western markets will be trying to rise just to prove to Putin that we are stronger and can enforce sanctions etc. They wont want the markets tanking as a result of his invasion. The wars are about the money just as much as the fighting. If Russia does get a bloody nose and has to withdraw from Ukraine it will have all gone very wrong for Putin. Just hope he doesn't push the big red button!

Anyway, above the 7474 level we are looking at the 7550 area again which was Friday high (and quite the bounce from 7220 overnight if that happened!). The 2h chart is still bullish and has 7333 as support from the Hull moving average.

That also ties in with the 30m support area at 7346 where we have the key fib and S1 for today. I wouldn't be surprised if we tested that today and I would like to see it hold for a push higher again. With that 2h at 7333 then this area does look to be worth a long.

However, should the markets go risk off and we see a break of this then a slide down to 7220 is likely. Below that then the bottom of the Raff channels come into play at 7160 (20day) and 7137 (10day). Dont think we will get that low but with the currently volatility then never rule anything out!

So, going to be another interesting day today. The war may well make the Fed a bit less hawkish as they look to support markets as well.

Good luck today and remain careful!

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