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Fed increases rates | FTSE climbs to 7400 | 7425 resistance above | 7315 7260 support

#1 · 28th July 2022, 10:08 am

Quote from Nick on 28th July 2022, 10:08 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 closed up on Wednesday as a jump in oil stocks and strong forecasts from heavyweights Reckitt Benckiser and Lloyds Banking Group overshadowed concerns over a slowing economy and soaring inflation. The index gained 0.6pc to 7,348.
The Federal Reserve has raised interest rates by 0.75 percentage points for a second straight month in the most aggressive tightening since the 1980s, piling pressure on the Bank of England to stamp down harder on surging prices.
The US central bank kept up the breakneck pace of interest rate increases and vowed to lift borrowing costs even further despite warning of a deepening slowdown in the world’s largest economy.
The Fed’s chairman Jerome Powell signalled that further US increases are on the way, although they will now begin to slow after dramatic action taken to cool demand in recent months.
The Fed’s actions will turn up the heat on the Bank of England as it faces mounting pressure from Conservative MPs to get to grips with inflation as elections begin for the party’s next leader.
The Bank is weighing up a 0.5 percentage point increase ahead of its meeting next week in what would be the biggest rise in interest rates in almost three decades.
Stocks rose in Asia on Thursday and the dollar fell as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets.
An Asian share gauge added just under 1%, but the gains were smaller than Wednesday’s 2.6% surge in the S&P 500 and 4.3% jump in the Nasdaq 100. A dip in futures suggested the US rally may cool.
Asian shares made cautious gains on Thursday as investors scented a possible slowdown in the pace of U.S. rate hikes, comforting bond markets and sending the dollar to a three-week low on the yen.
As expected, the U.S. Federal Reserve raised rates 75 basis points (bps) to 2.25-2.5% but did note some softening in recent data.
Fed Chair Jerome Powell sounded suitably hawkish on curbing inflation in his news conference, but also dropped guidance on the size of the next rate rise and noted that "at some point" it would be appropriate to slow down.
The futures market still has 100 bps of further tightening priced in by year-end, but also implies around 50 bps of rate cuts over 2023.
Attention now switches to data on U.S. gross domestic product for the second quarter where another negative reading would meet the technical definition of a recession, though the United States has its own method of deciding those.
Median forecasts are for growth of 0.5%, but the closely-watched Atlanta Fed estimate of GDP is for a fall of 1.2%.
FTSE100 live outlook prediction analysis for 28th July 2022
With the Fed raising rates as expected it's highly likely the BoE will do the same with a 50bps increase next week. As its widely expected then both of these are priced in, though won't be helping the looming crunch in cost of living coming this winter!
The S&P bulls will need to build on the rise today to show that it's not a bull trap/fake break and pull away from the 4000 level now. 3975 is also locked in as 2h support now if the bears were to break below the 3999 initial support.
For the FTSE100, the initial resistance is at R1 7402 and then the daily level of 7425 above that. It looks like we may well see that level tested today, and could see a bearish reaction there. It also aligns with R2 there, and the bulls will certainly be keen to break above 7400. The Raff channels continue to head upwards but we are not near testing them as yet.
For the bears, they will be looking to break below the pivot initially at 7359 as that would open up a drop down to the 7334 S1 level and possibly the key fib/200ema at 7315. That would be quite the retrace of the climb yesterday though so would likely see the bulls try and defend that.
The 2h chart remains bullish with the Hull MA support at 7350 for now. The daily chart is also bullish, and the 25ema support is at 7262 for the moment. It's likely that we will get a drop back to test this line at some point, though I don't see it dropping that low today.
Generally looks positive and buy the dips looks to be the best play still for the moment. Keep an eye on the key resistance levels as well.
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

The FTSE 100 closed up on Wednesday as a jump in oil stocks and strong forecasts from heavyweights Reckitt Benckiser and Lloyds Banking Group overshadowed concerns over a slowing economy and soaring inflation. The index gained 0.6pc to 7,348.

The Federal Reserve has raised interest rates by 0.75 percentage points for a second straight month in the most aggressive tightening since the 1980s, piling pressure on the Bank of England to stamp down harder on surging prices.

The US central bank kept up the breakneck pace of interest rate increases and vowed to lift borrowing costs even further despite warning of a deepening slowdown in the world’s largest economy.

The Fed’s chairman Jerome Powell signalled that further US increases are on the way, although they will now begin to slow after dramatic action taken to cool demand in recent months.

The Fed’s actions will turn up the heat on the Bank of England as it faces mounting pressure from Conservative MPs to get to grips with inflation as elections begin for the party’s next leader.

The Bank is weighing up a 0.5 percentage point increase ahead of its meeting next week in what would be the biggest rise in interest rates in almost three decades.

Stocks rose in Asia on Thursday and the dollar fell as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets.

An Asian share gauge added just under 1%, but the gains were smaller than Wednesday’s 2.6% surge in the S&P 500 and 4.3% jump in the Nasdaq 100. A dip in futures suggested the US rally may cool.

Asian shares made cautious gains on Thursday as investors scented a possible slowdown in the pace of U.S. rate hikes, comforting bond markets and sending the dollar to a three-week low on the yen.

As expected, the U.S. Federal Reserve raised rates 75 basis points (bps) to 2.25-2.5% but did note some softening in recent data.

Fed Chair Jerome Powell sounded suitably hawkish on curbing inflation in his news conference, but also dropped guidance on the size of the next rate rise and noted that "at some point" it would be appropriate to slow down.

The futures market still has 100 bps of further tightening priced in by year-end, but also implies around 50 bps of rate cuts over 2023.

Attention now switches to data on U.S. gross domestic product for the second quarter where another negative reading would meet the technical definition of a recession, though the United States has its own method of deciding those.

Median forecasts are for growth of 0.5%, but the closely-watched Atlanta Fed estimate of GDP is for a fall of 1.2%.

FTSE100 live outlook prediction analysis for 28th July 2022

With the Fed raising rates as expected it's highly likely the BoE will do the same with a 50bps increase next week. As its widely expected then both of these are priced in, though won't be helping the looming crunch in cost of living coming this winter!

The S&P bulls will need to build on the rise today to show that it's not a bull trap/fake break and pull away from the 4000 level now. 3975 is also locked in as 2h support now if the bears were to break below the 3999 initial support.

For the FTSE100, the initial resistance is at R1 7402 and then the daily level of 7425 above that. It looks like we may well see that level tested today, and could see a bearish reaction there. It also aligns with R2 there, and the bulls will certainly be keen to break above 7400. The Raff channels continue to head upwards but we are not near testing them as yet.

For the bears, they will be looking to break below the pivot initially at 7359 as that would open up a drop down to the 7334 S1 level and possibly the key fib/200ema at 7315. That would be quite the retrace of the climb yesterday though so would likely see the bulls try and defend that.

The 2h chart remains bullish with the Hull MA support at 7350 for now. The daily chart is also bullish, and the 25ema support is at 7262 for the moment. It's likely that we will get a drop back to test this line at some point, though I don't see it dropping that low today.

Generally looks positive and buy the dips looks to be the best play still for the moment. Keep an eye on the key resistance levels as well.

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