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NFP Friday with 250k forecast | 7424 7404 7395 7372 support | 7495 7523 resistance

FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The FTSE 100 was little changed yesterday as investors weighed the biggest interest rate hike from the Bank of England in 27 years, which raised fears of a looming recession. The bulls had managed to reach 7490 from our 7425 support level during the day, however it dropped back as the interest rate increase news was digested. The bulls will still be keen to try for 7500 though!

Stocks in Asia climbed along with US equity futures on Friday, helped by gains in technology shares, and oil snapped a slide as investor sentiment steadied after another turbulent week.

An Asian equity index rose 0.8%, while S&P 500, Nasdaq 100 and European contracts posted modest gains. Taiwan recouped losses fueled by US House Speaker Nancy Pelosi’s visit, a jump that may have helped the wider mood.

Oil languished near its lowest since the start of the war in Ukraine on Friday on fears of a global recession, though stocks ignored such worries, gaining ahead of U.S. jobs data that will give another clue to the health of the world’s largest economy.

In another warning sign for the global economy, the closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes reached 39.2 basis points overnight, the deepest inversion since 2000. An inverted curve is often viewed as portending a recession.

On Friday morning, 10-year yield was 2.6865% and the two-year yield 3.0509, leaving the gap between them at a still large 36.6 basis points.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.74%, helped by gains from index heavyweight TSMC, which rose 1.8%, regaining ground it had lost earlier in the week due to U.S. House of Representatives Speaker Nancy Pelosi’s visit to Taiwan. Japan’s Nikkei gained 0.43%.

U.S. employment data, due later in the day, is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.

Recession Recedes
The odds of a recession in the US are tumbling, if a JPMorgan trading model is to be believed. With the exception of base metals, pricing of major markets suggest even odds, or less, after the US economy shrank for a second straight quarter. The S&P 500 implies a 51% probability of recession — down from 91% two months ago.

FTSE100 live outlook prediction analysis for 5th August 2022

That was a good bounce off the 7425 support level and the bulls have managed to continue to defend that area with the drop back after the bell. Today's big event is the USA NFP payrolls with 250k forecast, and unemployment at 3.6%. NFP Fridays can often be a bit weird so stay nimble today!

Initially today we have support at 7450 with the daily pivot here, along with the 30m coral, and a weak 2h support zone here as well. Should the bears pop it lower to start with then 7423 is the 30m 200ema and we could see a possible overshoot of this down to the daily support level at 7410, and a test of the bottom of the 10d Raff channel at 7408. If we were to do so then a long around this level looks to be worth trying.

I feel that the S&P500 will want to go for the 4190+ level, while the FTSE100 will be trying for 7500 and above still.

Below the 7400 level though and then it gets a bit more worrying for the bulls as the bears will be aiming for 7340 or lower, as that would also open up a test of the 25ema on the daily at 7327. I don't expect to drop that low today unless the NFP and other news upsets the apple cart.

For the bulls, they will be looking to break above the recent high at 7495 and test that 7513 level, and possibly even the 7524 R2 level this morning. Generally things remain bullish, despite the negative back drop but the FTSE100 could do with pushing on a bit really. It will be interesting to see if they can break above the 7530 level if it gets that high as that could be quite strong resistance.

S&P500
As mentioned, the bulls will be looking to test the 4200 level before too long, but we may well see it stumble here a bit.  4189 is R2 for today and 4178 is the daily 200ema so we are coming into some decent resistance levels now. Support wise, the 4152 level is first up with the daily pivot here, and then the 4135 level that has been defended a few times so far below that. 4121 is the next key level down, and just above S2 at 4115. Should it get to this area then I expect the bulls will mount a bit of a defence here.

Good luck today and done forget the NFP news out at 1330. Have a great weekend as well.

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