Quote from Nick on 20th April 2020, 9:55 am

FTSE 100 live outlook prediction analysis for 20th April 2020

US crude fell about 20 percent to below $15 a barrel on Monday, its lowest level in about two decades, as a coronavirus-triggered collapse in demand eclipsed a deal to cut output. Futures in New York fell 16% to around $15 a barrel after losing almost a fifth of their value last week as the deal by OPEC+ and other producers failed to counter the demand hit from a crippled global economy.

Shares were mixed in Asia on Monday after China cut a key interest rate to help cushion the impact of the pandemic on its economy. Benchmarks rose on Monday in Hong Kong and Shanghai but fell in Tokyo.  A fresh crop of grim economic data is expected this week after a worldwide rally on Friday that pushed the S&P 500 up 2.7%. Japan reported Monday that its exports fell nearly 12% in March from a year earlier as shipments to its two biggest markets, the U.S. and China, slipped. Providing a lift for Chinese markets, banks cut the benchmark interest rate, called the 1-year loan prime rate, by 0.20 basis points to 3.85%, seeking to boost the economy after it contracted by 6.8% in the first quarter of the year. The 5-year loan prime rate was cut by 10 basis points to 4.65%.

Global equities surged on Friday as reports of trials for a possible coronavirus drug injected optimism into the mood on trading floors. The FTSE 100 closes 2.82pc up to 5,786.96 while the FTSE 250 jumped 3.13pc to 15,859.29.

On the ‘Descent’

New York’s virus outbreak may have begun “a descent” as the rates of new infections and deaths slow in the state. Governor Andrew Cuomo said Sunday that New York appeared to be “on the other side” of the outbreak. The death tally in the U.S. topped 40,000. A deal on new U.S. aid for small businesses could be days away. The first sign of easing emerged in Europe as hard-hit Italy, Spain and France reported the smallest increases in fatalities in week. Germany is letting smaller stores, car dealerships, bike shops and bookstores reopen Monday. Still, social restrictions imposed to curb the virus must be eased in phases and don’t spell the end of the epidemic, World Health Organization Director-General Tedros Adhanom Ghebreyesus said. Singapore now has the most cases in Southeast Asia, overtaking Indonesia after the city-state detected hundreds more victims among low-wage foreign workers. But a government minister said foreign workers in Singapore know they are currently safer in the city-state than elsewhere including their own countries.

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

Oil (US Crude) has dropped off again today and looks to be on a path towards the $10 area though they will be keen to get it back over $20 as soon as possible, as that would open up a bounce towards $30.  A significant fall in oil weighs on the FTSE mainly due to Shell and BP. As such, and as we are looking at an open just above the 5800 area we may well see a drop down initially this morning. That said, the 2 hour chart is bullish after Friday's rise, and has support at the 5720 and 5700 levels for today, so should we dip that low then we may well see this area hold. The S&P is flirting with resistance at the 2880 level, and a move above that keeps a test of 2930 alive. That said, its possible that the bounce has started to lose some strength at the 2895 area on Friday and a decline back towards 2500 is on the cards. We are also hitting the daily coral on the FTSE for the first time since it changed red at 5825. As such, whilst the trends are still up for the moment it will pay to be cautiously bullish at the moment rather than expecting the run to continue much longer.

I have put my preferred route in blue on the chart below which is the 5760 support level holding, however the pink arrows (plan B) have the drop heading down as far at the 5700 level and then a possible bounce at this level so bear that in mind.

If the bulls were to push above the 5865 R1 level for today then we remain on the path towards the top of the 10 day Raff channel at 6115 for the moment, but that is still heading up so that upside target will continue to get higher.

The other reason I am thinking that the 5760 area will hold is that it will be the first test of the 200ema on the 30min since we crossed over it on Thursday,  and as such that should now become support. If not then that 5710 area looks likely to be tested.

So for today I am cautiously bullish but looking at the key resistance levels in play on the S&P at 2880 and 2930. That first resistance may well tally with the FTSE at 5864 and 5900 as well. Support 5765 and then 5705. Good luck today.

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