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Looking a bit more bearish | 6690 6650 support | 6762 6791 resistance | Inflation picks up

#1 · 18th February 2021, 9:44 am

Quote from Nick on 18th February 2021, 9:44 am
FTSE 100 live outlook prediction analysis for 18th February 2021
London’s markets gave back some more of their hard earned gains from this month, ending in the red for the second consecutive day as inflation picked up a little more than expected in January.

Stocks listed in the City have rallied through February on hopes of an impending economic recovery as the UK’s vaccine rollout hits its targets. The rally, however, is somewhat cooling as the week goes on.
Losses on Wednesday came partly in tangent with a broad dip in European and American markets, but also as official data showed the UK’s inflation rate rose to 0.7pc last month pushed by higher food prices and less discounting of household goods. A slight drop in the value of the sterling against the US dollar did little to boost equities.
The FTSE 100 edged down 38.0 to close at 6,710.9 while the FTSE 250 lost 266.9 to 21,149.5.
No News Is...
Facebook has started restricting the sharing of news on its service in Australia, defying a controversial proposed law that would require technology companies to pay publishers when their articles are posted by users. Facebook’s decision blocks those in Australia from sharing news stories and stops users globally from sharing articles from Australian publishers. The ban constitutes the strongest action yet in response to the proposed legislation, which would force Facebook and Google to pay publishers for the value their articles generate on the digital platforms. News outlets have argued they should be fairly compensated for their journalism, as the two web giants capture much of the advertising market.
Markets Muted
Asian stocks looked set for a muted open after a mixed session from their U.S. peers as investors weighed strong retail sales against concerns about inflation. Treasury yields retreated from a one-year high. Futures were little changed in Japan and dipped in Australia and Hong Kong. The S&P 500 Index finished little changed, while the Nasdaq slipped as stocks seen as most sensitive to higher inflation retreated. The dollar rallied against most major peers. Elsewhere, oil rose for a third session and Bitcoing jumped past $52,000.
Rally Resumes
Chinese markets are set to extend their rally and are primed for all-time highs when they open for the first time after the Lunar New Year break. The CSI 300 Index is within 70 points of its 2007 closing peak, and there are promising omens for it to break through that barrier. Chinese stocks listed in Hong Kong have gained 3.5% since onshore markets last traded, while the offshore yuan has been steady after hitting its strongest level versus the greenback in 32 months this week.
Waiting Game
Federal Reserve officials in January expected it would be “some time”before conditions to scale back massive bond purchases were met, leaving open the question of whether any tapering could start before 2022. The account reinforced the dovish message from Fed Chair Jerome Powell, who said last week that the U.S. is “very far from a strong labor market whose benefits are broadly shared." While some regional Fed presidents have raised the possibility of paring bond purchases later in 2021 if the economy performed better than expected, Powell has called such talk premature.[Bloomberg]
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US & Asia Overnight from Bloomberg
Asian stocks dropped with U.S. futures and Chinese shares pared a rally Thursday as traders weighed the implications for equities of the recent jump in Treasury yields. Crude oil extended its advance after a cold blast disrupted U.S. output.
China’s stock market, reopening after the Lunar New Year break, gave up earlier gains. S&P 500 futures retreated after the index closed flat. The Nasdaq ended lower Wednesday amid concern about the impact of higher yields on valuations. The dollar was steady.
Earlier, the 10-year Treasury yield briefly climbed as high as 1.33% before retreating. Crude oil advanced past $62. Bitcoin held above $52,000 a day after vaulting past that level for the first time.
The recent dramatic rise in bond yields has investors wondering afresh how high they can climb before spoiling the risk rally. That adds to concerns that speculative froth may be setting equities up for a fall. Still, with vaccines being rolled out and economic activity picking up around the world, investors continue to bet on share market gains while shifting more into cyclical stocks.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The FTSE is just about managing to hang onto the 6700 level at the moment, despite the downward pressure from the daily chart for a test of the 25ema at 6618. We could of course still see a test of that level before too long and it will be worth watching to see if the bulls can bounce it off that. The S&P is also defending its round number at 3900 but the 2 hour chart remains bearish with resistance at 3943 and 3946 on that. As such if we do get a climb to that area today then I am thinking that we may well see a dip from there.
Initially for the FTSE its at 6730 as I write this and I am thinking that we will see an initial dip down to the 200ema at the 6692 level. That is also just above S1 for today at 6685. If that area holds then I wouldn't be surprised to see the bulls pull this up towards the R1 level at 6764, and also a test of the key fib level here.
Above the 6765 level then 6791 is the Hull MA on the 2 hour chart and would be the second test of that resistance line, also with the recent high from Monday at 6800. Will the bulls be able to break this though? With the S&P resistance at 3945 probably coinciding with this level probably not! Above there though and 6833 is the next level to keep an eye on.
For the bears, they will be looking to break the 6680 level today as that would more than likely lead to a test of the daily 25ema at the 6616 level as mentioned. We also have the bottom of the 10 day Raff channel here. Bulls would like this to hold otherwise it gets a lot more bearish, and then we would be back looking at a slide to 6385 where we have the 200ema on the daily.
Not much more to say really, still thinking shorting the rallies is the play for the moment and watching 3945 on S&P, 6730 and 6763 on the FTSE for resistance. 6685 and 6616 as support. 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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Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
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FTSE 100 live outlook prediction analysis for 18th February 2021

London’s markets gave back some more of their hard earned gains from this month, ending in the red for the second consecutive day as inflation picked up a little more than expected in January.

Stocks listed in the City have rallied through February on hopes of an impending economic recovery as the UK’s vaccine rollout hits its targets. The rally, however, is somewhat cooling as the week goes on.

Losses on Wednesday came partly in tangent with a broad dip in European and American markets, but also as official data showed the UK’s inflation rate rose to 0.7pc last month pushed by higher food prices and less discounting of household goods. A slight drop in the value of the sterling against the US dollar did little to boost equities.

The FTSE 100 edged down 38.0 to close at 6,710.9 while the FTSE 250 lost 266.9 to 21,149.5.

No News Is...

Facebook has started restricting the sharing of news on its service in Australia, defying a controversial proposed law that would require technology companies to pay publishers when their articles are posted by users. Facebook’s decision blocks those in Australia from sharing news stories and stops users globally from sharing articles from Australian publishers. The ban constitutes the strongest action yet in response to the proposed legislation, which would force Facebook and Google to pay publishers for the value their articles generate on the digital platforms. News outlets have argued they should be fairly compensated for their journalism, as the two web giants capture much of the advertising market.

Markets Muted

Asian stocks looked set for a muted open after a mixed session from their U.S. peers as investors weighed strong retail sales against concerns about inflation. Treasury yields retreated from a one-year high. Futures were little changed in Japan and dipped in Australia and Hong Kong. The S&P 500 Index finished little changed, while the Nasdaq slipped as stocks seen as most sensitive to higher inflation retreated. The dollar rallied against most major peers. Elsewhere, oil rose for a third session and Bitcoing jumped past $52,000.

Rally Resumes

Chinese markets are set to extend their rally and are primed for all-time highs when they open for the first time after the Lunar New Year break. The CSI 300 Index is within 70 points of its 2007 closing peak, and there are promising omens for it to break through that barrier. Chinese stocks listed in Hong Kong have gained 3.5% since onshore markets last traded, while the offshore yuan has been steady after hitting its strongest level versus the greenback in 32 months this week.

Waiting Game

Federal Reserve officials in January expected it would be “some time”before conditions to scale back massive bond purchases were met, leaving open the question of whether any tapering could start before 2022. The account reinforced the dovish message from Fed Chair Jerome Powell, who said last week that the U.S. is “very far from a strong labor market whose benefits are broadly shared." While some regional Fed presidents have raised the possibility of paring bond purchases later in 2021 if the economy performed better than expected, Powell has called such talk premature.[Bloomberg]

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US & Asia Overnight from Bloomberg

Asian stocks dropped with U.S. futures and Chinese shares pared a rally Thursday as traders weighed the implications for equities of the recent jump in Treasury yields. Crude oil extended its advance after a cold blast disrupted U.S. output.

China’s stock market, reopening after the Lunar New Year break, gave up earlier gains. S&P 500 futures retreated after the index closed flat. The Nasdaq ended lower Wednesday amid concern about the impact of higher yields on valuations. The dollar was steady.

Earlier, the 10-year Treasury yield briefly climbed as high as 1.33% before retreating. Crude oil advanced past $62. Bitcoin held above $52,000 a day after vaulting past that level for the first time.

The recent dramatic rise in bond yields has investors wondering afresh how high they can climb before spoiling the risk rally. That adds to concerns that speculative froth may be setting equities up for a fall. Still, with vaccines being rolled out and economic activity picking up around the world, investors continue to bet on share market gains while shifting more into cyclical stocks.

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

The FTSE is just about managing to hang onto the 6700 level at the moment, despite the downward pressure from the daily chart for a test of the 25ema at 6618. We could of course still see a test of that level before too long and it will be worth watching to see if the bulls can bounce it off that. The S&P is also defending its round number at 3900 but the 2 hour chart remains bearish with resistance at 3943 and 3946 on that. As such if we do get a climb to that area today then I am thinking that we may well see a dip from there.

Initially for the FTSE its at 6730 as I write this and I am thinking that we will see an initial dip down to the 200ema at the 6692 level. That is also just above S1 for today at 6685. If that area holds then I wouldn't be surprised to see the bulls pull this up towards the R1 level at 6764, and also a test of the key fib level here.

Above the 6765 level then 6791 is the Hull MA on the 2 hour chart and would be the second test of that resistance line, also with the recent high from Monday at 6800. Will the bulls be able to break this though? With the S&P resistance at 3945 probably coinciding with this level probably not! Above there though and 6833 is the next level to keep an eye on.

For the bears, they will be looking to break the 6680 level today as that would more than likely lead to a test of the daily 25ema at the 6616 level as mentioned. We also have the bottom of the 10 day Raff channel here. Bulls would like this to hold otherwise it gets a lot more bearish, and then we would be back looking at a slide to 6385 where we have the 200ema on the daily.

Not much more to say really, still thinking shorting the rallies is the play for the moment and watching 3945 on S&P, 6730 and 6763 on the FTSE for resistance. 6685 and 6616 as support. 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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