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Dip likely but can the bulls fight back | 6825 6815 7764 support | 7911 7939 resistance

#1 · 6th February 2023, 9:29 am

Quote from Nick on 6th February 2023, 9:29 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
FTSE100 live outlook prediction analysis for 6th February 2023
Last week, the Federal Reserve and the European Central Bank raised interest rates as expected and flagged that credit conditions would remain as tight as necessary to tame inflation. Still, stocks rallied and bond yields fell as markets priced in lower rates. The two asset classes enjoyed one of the best Januaries on record.
However, Friday’s blowout U.S. jobs growth data has dashed market hopes that the Fed was close to pausing its monetary policy tightening cycle. Futures are almost fully priced for a quarter point rate rise in March, and likely another in May, leaving the peak at 5.0%, compared with 4.9% ahead of the jobs data. The U.S. jobs data showed the unemployment rate hit more than a 53-1/2-year low of 3.4%.
Asian shares slid on Monday after a run of upbeat economic data from the United States and globally lessened the risk of recession, but also suggested interest rates would have to rise further and stay up for longer.
Well Friday was a bit bullish wasn't it, as the FTSE100 got that 7913 level and generated a few headlines as it got to the all-time high again. However, it has dropped off a bit from there having set a very long term double top! Obviously that is the line in the sand now that the bulls have to break and it may well take quite a concerted effort to push past that but if they do so then the 8200 level has flagged up on the daily chart!!!
That's a way off and for today I am looking at more of a dip and rise to play out to test the 7815 support area initially. With NFP coming in slightly higher (!!) than forecast it doesn't lend much weight to the argument for slowing the pace of interest rate rises, which will likely weight on markets for the moment.
7831 is S1, and then we have some more crucial key fib at 7810 and also the 30m 200ema at 7819. So an overshoot of S1 then bounce from those slightly lower supports would fit pretty well.
Should the bears break below that then 7764 is S2 and also the bottom of the 10d Raff at 7745 comes into play, though that feels a little bit too bearish for today. They will certainly be keen to have a bull Monday and try and get another close around the 7900 level if possible so that the recent strength isn't too much of a flash in the pan.
Resistance wise, obviously 7913 is the big one, and then above that the 7939 level for a test of R1 is next up. It also feels a bit of a big ask to see that and I wouldn't be surprised if we have bit of consolidation for the next few sessions and bounce around between 7800 and 7900 for the early part of the week. The bulls have brought it too far to give up too easily.
We also have the top of the Raff channels at 7916 for the 20 day and 7940 for the 10 day, hence thinking that 7940 might gap any proper strength above 7913 today.
UK GDP on Friday will also be quite telling as to the state of the economy though the media are quite fixated on house prices at the moment which are slowly dropping back.
So, could be an interesting one today and watch the 7815 area for support, 7915 area for resistance. If we do bounce around in that range for a while then that suits us fine! Good luck today.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

FTSE100 live outlook prediction analysis for 6th February 2023

Last week, the Federal Reserve and the European Central Bank raised interest rates as expected and flagged that credit conditions would remain as tight as necessary to tame inflation. Still, stocks rallied and bond yields fell as markets priced in lower rates. The two asset classes enjoyed one of the best Januaries on record.

However, Friday’s blowout U.S. jobs growth data has dashed market hopes that the Fed was close to pausing its monetary policy tightening cycle. Futures are almost fully priced for a quarter point rate rise in March, and likely another in May, leaving the peak at 5.0%, compared with 4.9% ahead of the jobs data. The U.S. jobs data showed the unemployment rate hit more than a 53-1/2-year low of 3.4%.

Asian shares slid on Monday after a run of upbeat economic data from the United States and globally lessened the risk of recession, but also suggested interest rates would have to rise further and stay up for longer.

Well Friday was a bit bullish wasn't it, as the FTSE100 got that 7913 level and generated a few headlines as it got to the all-time high again. However, it has dropped off a bit from there having set a very long term double top! Obviously that is the line in the sand now that the bulls have to break and it may well take quite a concerted effort to push past that but if they do so then the 8200 level has flagged up on the daily chart!!!

That's a way off and for today I am looking at more of a dip and rise to play out to test the 7815 support area initially. With NFP coming in slightly higher (!!) than forecast it doesn't lend much weight to the argument for slowing the pace of interest rate rises, which will likely weight on markets for the moment.

7831 is S1, and then we have some more crucial key fib at 7810 and also the 30m 200ema at 7819. So an overshoot of S1 then bounce from those slightly lower supports would fit pretty well.

Should the bears break below that then 7764 is S2 and also the bottom of the 10d Raff at 7745 comes into play, though that feels a little bit too bearish for today. They will certainly be keen to have a bull Monday and try and get another close around the 7900 level if possible so that the recent strength isn't too much of a flash in the pan.

Resistance wise, obviously 7913 is the big one, and then above that the 7939 level for a test of R1 is next up. It also feels a bit of a big ask to see that and I wouldn't be surprised if we have bit of consolidation for the next few sessions and bounce around between 7800 and 7900 for the early part of the week. The bulls have brought it too far to give up too easily.

We also have the top of the Raff channels at 7916 for the 20 day and 7940 for the 10 day, hence thinking that 7940 might gap any proper strength above 7913 today.

UK GDP on Friday will also be quite telling as to the state of the economy though the media are quite fixated on house prices at the moment which are slowly dropping back.

So, could be an interesting one today and watch the 7815 area for support, 7915 area for resistance. If we do bounce around in that range for a while then that suits us fine! 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