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Fed kill the rally | Despite 2 more years of stimulus | 6168 6154 6080 support | 6301 resistance

#1 · 11th June 2020, 8:44 am

Quote from Nick on 11th June 2020, 8:44 am
FTSE 100 live outlook prediction analysis for 11th June 2020
US consumer prices at –0.1pc month-on-month in May, just 0.1pc up year-on-year
European markets extend fall
OECD warns Britain will be biggest economic victim of Covid-19
Chinese inflation disappoints
Pressure rises on HSBC in Hong Kong row as Aviva lashes out
Global stock markets struggled yesterday ahead of the US Federal Reserve policy decision as investors lost their appetite for risk that had fuelled a recent rally as coronavirus lockdowns eased. Europe jumped out of the blocks at the open, but swiftly fell back as caution prevailed before the conclusion of the Fed's latest monetary policy gathering. London's benchmark index ended just 0.10pc lower at 6,329.13 while the FTSE 250 closed 0.84pc down at 17,605.46.
The Federal Reserve is ready to provide two-and-a-half more years of exceptional stimulus for the US economy, it said on Wednesday night, as it warned of “considerable risks” posed by the coronavirus pandemic. The Federal Open Markets Committee, which sets the Fed’s monetary stance, unanimously voted to keep interest rates at their historic lows.
Policymakers also said they expected to keep rates low until the end of 2022, projecting a 6.5pc decline in GDP this year and a 9.3pc unemployment rate at year’s end. It was the first time the Fed has provided economic projections since coronavirus pushed the world’s biggest economy into recession.
“The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term,” the Fed said in its latest policy statement.
The majority of the statement repeated language from its April meeting, but the central bank pledged to maintain bond purchases at “the current pace” of about $80bn (£63bn) per month in Treasuries and $40bn per month in agency and mortgage backed securities. That is expected to begin in earnest in 2021 with growth forecast at 5pc as the economy recovers some ground after this year’s crash.
Stocks on Wall Street initially turned positive on the back of the report before slipping back.
The tech-heavy Nasdaq was up around 1pc but both the Dow Jones and the benchmark S&P 500 were in the red. Shares have gone on an astonishing bull run in recent weeks, despite soaring unemployment and economic contraction caused by the Covid-19 pandemic. The Fed’s support has been cited as a leading factor in the market’s recovery.
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FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Global stocks retreated Thursday amid fears of a second wave of the coronavirus in the U.S. and overnight caution from the Federal Reserve. Japanese shares led Asian equities lower, while U.S. and European futures slid. Losses accelerated after data showed coronavirus cases surpassing 2 million in the U.S., with hospitalizations jumping in Texas. Treasuries consolidated gains made in the wake of the Fed decision, which featured fresh projections including an outlook for no interest-rate hikes through 2022. The dollar rebounded and the yen pushed higher.
Despite the initial kick up on the Fed last night the bears took control again and we have slid further overnight towards the bottom of the 20 day Raff channel at 3130. This is the next key area for the bulls to defend, and a break of this will bring that rally to a halt. As you know from yesterdays email all the 2 hour charts went bearish yesterday signifying the change in trend, though we haven't tested the specific resistance levels on that chart timeframe as yet. As such, should we get a rally up to these levels then shorts are the way to go - 12740 Dax, 3236 SPX, 6384 FTSE. Of course, as these are moving average lines then they are slowly moving downwards as well.
For the FTSE today we have initial support at the 6200 round number and just below S1. We have dipped below both the Raff channels overnight, so at the very least we may well see a back test of them initially this morning as the bulls try and close the gap with yesterdays closing price at 6329. Or at least an attempt. If the bulls do go for it then the daily pivot at 6301 is the next area to watch, but with the 30min coral just below this at 6293 and dropping we may not get that high. Above this level then the 200ema on the 30min tallies with R1 at 6347 and would (a) see a strong fight back from the bulls and (b) make a good shorting area!
As mentioned, keep watching the 2 hour levels mentioned as well as shorting the rallies is the play for the moment while the 2 hour chart is bearish.
Below the 6200 support level we have S2 at 6167 and that may well tally with that 3130 level on the S&P (bottom of the 20d Raff channel there). We also would be looking at a further test of the 25ema on the daily at 6153, though a break of this would see a further slide down towards the 6000 level with a pause at S3 at 6079.
The daily RSI's have been overbought for the past few sessions and are now finally dropping off, which will help to alleviate the overbought conditions that were prevalent across the board. Pull backs are healthy of course, and we may well find that this is just that in the overall bullish trend, though the market is a bit fearful of the fact that virus cases have topped 2 million. Good luck today.
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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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FTSE 100 live outlook prediction analysis for 11th June 2020

US consumer prices at –0.1pc month-on-month in May, just 0.1pc up year-on-year
European markets extend fall
OECD warns Britain will be biggest economic victim of Covid-19
Chinese inflation disappoints
Pressure rises on HSBC in Hong Kong row as Aviva lashes out

Global stock markets struggled yesterday ahead of the US Federal Reserve policy decision as investors lost their appetite for risk that had fuelled a recent rally as coronavirus lockdowns eased. Europe jumped out of the blocks at the open, but swiftly fell back as caution prevailed before the conclusion of the Fed's latest monetary policy gathering. London's benchmark index ended just 0.10pc lower at 6,329.13 while the FTSE 250 closed 0.84pc down at 17,605.46.

The Federal Reserve is ready to provide two-and-a-half more years of exceptional stimulus for the US economy, it said on Wednesday night, as it warned of “considerable risks” posed by the coronavirus pandemic. The Federal Open Markets Committee, which sets the Fed’s monetary stance, unanimously voted to keep interest rates at their historic lows.

Policymakers also said they expected to keep rates low until the end of 2022, projecting a 6.5pc decline in GDP this year and a 9.3pc unemployment rate at year’s end. It was the first time the Fed has provided economic projections since coronavirus pushed the world’s biggest economy into recession.

“The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term,” the Fed said in its latest policy statement.

The majority of the statement repeated language from its April meeting, but the central bank pledged to maintain bond purchases at “the current pace” of about $80bn (£63bn) per month in Treasuries and $40bn per month in agency and mortgage backed securities. That is expected to begin in earnest in 2021 with growth forecast at 5pc as the economy recovers some ground after this year’s crash.
Stocks on Wall Street initially turned positive on the back of the report before slipping back.

The tech-heavy Nasdaq was up around 1pc but both the Dow Jones and the benchmark S&P 500 were in the red. Shares have gone on an astonishing bull run in recent weeks, despite soaring unemployment and economic contraction caused by the Covid-19 pandemic. The Fed’s support has been cited as a leading factor in the market’s recovery.

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

Global stocks retreated Thursday amid fears of a second wave of the coronavirus in the U.S. and overnight caution from the Federal Reserve. Japanese shares led Asian equities lower, while U.S. and European futures slid. Losses accelerated after data showed coronavirus cases surpassing 2 million in the U.S., with hospitalizations jumping in Texas. Treasuries consolidated gains made in the wake of the Fed decision, which featured fresh projections including an outlook for no interest-rate hikes through 2022. The dollar rebounded and the yen pushed higher.

Despite the initial kick up on the Fed last night the bears took control again and we have slid further overnight towards the bottom of the 20 day Raff channel at 3130. This is the next key area for the bulls to defend, and a break of this will bring that rally to a halt. As you know from yesterdays email all the 2 hour charts went bearish yesterday signifying the change in trend, though we haven't tested the specific resistance levels on that chart timeframe as yet. As such, should we get a rally up to these levels then shorts are the way to go - 12740 Dax, 3236 SPX, 6384 FTSE. Of course, as these are moving average lines then they are slowly moving downwards as well.

For the FTSE today we have initial support at the 6200 round number and just below S1. We have dipped below both the Raff channels overnight, so at the very least we may well see a back test of them initially this morning as the bulls try and close the gap with yesterdays closing price at 6329. Or at least an attempt. If the bulls do go for it then the daily pivot at 6301 is the next area to watch, but with the 30min coral just below this at 6293 and dropping we may not get that high. Above this level then the 200ema on the 30min tallies with R1 at 6347 and would (a) see a strong fight back from the bulls and (b) make a good shorting area!

As mentioned, keep watching the 2 hour levels mentioned as well as shorting the rallies is the play for the moment while the 2 hour chart is bearish.

Below the 6200 support level we have S2 at 6167 and that may well tally with that 3130 level on the S&P (bottom of the 20d Raff channel there). We also would be looking at a further test of the 25ema on the daily at 6153, though a break of this would see a further slide down towards the 6000 level with a pause at S3 at 6079.

The daily RSI's have been overbought for the past few sessions and are now finally dropping off, which will help to alleviate the overbought conditions that were prevalent across the board. Pull backs are healthy of course, and we may well find that this is just that in the overall bullish trend, though the market is a bit fearful of the fact that virus cases have topped 2 million. 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 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

Keep up to date with new content, free sign up below

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