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Jackson Hole today so stay nimble | 7120 7070 support | 7150 7165 7202 resistance

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

Wall Street dropped off from record highs yesterday, as data showed first-time claims for jobless benefits remained near post-pandemic lows, despite rising slightly last week.

Markets also turned cautious following explosions in Afghanistan and ahead of the Fed's Jackson Hole gathering that could give more clues about its approach to tapering stimulus.

Views are split on whether the meeting will end in a clearer guide on paring emergency Fed support. While the ongoing economic rebound and rising inflation support this, the fast-spreading delta virus strain threatens a slower pace of recovery than had been expected.

FTSE 100 live outlook prediction analysis for 27th August 2021

As I expect you know we have a big news driven Fed day ahead so be a bit more cautious today as we could get some whipsaws. It's looking positive to start with though so we may well get a rise and then a dip later ahead of the weekend. We also have a bank holiday on Monday in the UK and with the escalating Afghanistan unrest we may not see much buying towards the end of the session.

Initially support is at the daily pivot at 7121 and the 30m coral has also just gone green with support at 7126 so we may well see this area hold to start with. The bulls will be looking to take this up towards the 7149 first daily resistance level, but ultimately they will be aiming for the 7165 key fib level. Should this break then the next main area is once again around the 7200 level where we have R3, and the round number. Might be a big ask today unless the fed really talk it up and the S&P500 pushes on towards new record highs again.

For the bears, below the 7120 level hen S1 is first up at 7097, then the daily support at 7071 below that, along with the key fib at 7070 and S2 here too. This area should therefore in theory hold and a bounce here would be good too long.

A failure of 7070 though and we will likely drop down towards the 7000 level again and that weakness may be seen on the S&P500 as well as if that breaks the support at 4462 then it may well slide as far as S3 at 4433.

So, with a new heavy Friday stay nimble today and good luck. Have a great weekend!

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Asian Session

Asian stocks were steady Friday as Chinese technology shares advanced, while U.S. futures rose ahead of a key Federal Reserve gathering that may offer clues about the timeline for tapering stimulus.

MSCI Inc.’s Asia-Pacific gauge eked out a gain. Chinese tech names rallied on bets that the most intense phase of Beijing’s regulatory crackdown has passed. China’s central bank also supported sentiment after signaling targeted steps to cushion the economy.

U.S. futures rose as traders awaited Fed Chair Jerome Powell’s Jackson Hole symposium speech. President Joe Biden’s advisers are considering backing Powell for a second term, people familiar with the matter said, a step that could bolster expectations of continuity in accommodative monetary policy.

Treasury yields edged lower and the dollar held a climb. A flood of Treasury options expiring Friday raise the prospect for volatility after Powell’s remarks. Some Fed officials overnight said the time to start tapering stimulus is near, weighing on the S&P 500, which slipped from a record.

The recovery from the pandemic and elevated inflation are supporting calls for monetary policy normalization. But the recent spread of the delta virus strain has complicated economic reopening. Markets are waiting to see how Powell balances these competing factors in his comments.

While investor mood ahead of Jackson Hole “arguably points to an accommodative enough Fed tilt to keep markets buoyed, thin trading in the U.S. bond markets this week suggests latent caution, and sideline bias in search of more clarity,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, wrote in a note.

Among Fed officials, Dallas President Robert Kaplan said he favors the start of tapering in October or shortly after. St. Louis’s James Bullard called for a start in the fall. Kansas City Fed’s Esther George urged an early move to begin this year. None of them vote on policy in 2021. West Texas Intermediate oil advanced, heading toward its strongest week since October. Gold climbed to about $1,800 an ounce. Bitcoin was trading around $47,000. [Bloomberg]

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