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Rise dip rise pattern today | Central bank chop | 7306 7330 resistance | 7250 7209 support

#1 · 20th September 2022, 9:35 am

Quote from Nick on 20th September 2022, 9:35 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Friday saw London's markets sink into the red again and the pound tumbled amid economic gloom ahead of central bank meetings next week. The FTSE 100 ended the day down 0.6pc at 7,236. Expected rate rises and worries over a lengthy recession have kept up general pessimism which only grew after a weak opening in the US markets. The pound also plunged to below 1.14 dollars for the first time since 1985 after weak retail sales data in the UK for August although it recovered some ground later on Friday.
Stocks extended gains in Asia after a rebound in the final hour of New York trading as investors shifted positions ahead of a flurry of central bank decisions this week led by the Federal Reserve. Asian shares edged up in early trade on Tuesday following a rebound in the final hour of New York trading as investors turned their attention to an expected hefty Federal Reserve interest rate hike this week to tackle inflation.
MSCI Inc.’s Asia-Pacific equity index advanced for the first time in six days. Hong Kong stocks rallied amid a report that Hong Kong plans to relax Covid curbs for travelers. Japan’s Nikkei 225 earlier jumped by as much as 1.2% after traders returned from a holiday. S&P 500 and Nasdaq 100 futures edged higher.
Treasury 10-year yields hovered near 3.5% while yields on the more policy-sensitive two-year rate hit the highest since 2007 and are poised to crack above 4%, amid fears that an overtightening of monetary settings raises the odds of a hard landing.
Investors are on tenterhooks as they await policy decisions that are expected to bring hefty rate hikes from the US, UK and Sweden. Decisions are also due in Japan, Switzerland, Indonesia, Norway and the Philippines, among others.
Traders are betting the Fed will hike by 75 basis points Wednesday, signal rates are heading above 4% and will then pause. The long hold strategy is rooted in the idea the central bank would avoid the disastrous stop-go policy of the 1970s that allowed inflation to get out of hand.
On Monday, Wall Street’s main indexes closed higher after seesawing during the session as investors wait to see how aggressively the Fed will hike interest rate hikes at this week’s policy meeting.
The S&P 500 and the Nasdaq Composite rebounded after logging their worst weekly percentage drop since June, as markets were fully priced for a rise in interest rates of at least 75 basis points at the end of Fed’s Sept. 20-21 policy meeting.
Markets are priced for rates to climb as high as 4.5% by early 2023, compared with the Fed’s current 2.25%-2.5% policy rate range. That is high enough to take a bite from growth, and is holding down bond yields at the longer end of the curve.
The Dow Jones Industrial Average rose 0.64%, the S&P 500 gained 0.69% and the Nasdaq added 0.76%.
It is not just in the United States that interest rate rises are expected. Most of the central banks meeting this week - from Switzerland to South Africa - are expected to hike, with markets split on whether the Bank of England will move by 50 or 75 basis points.
Oil prices also dropped, pressured by the stronger dollar, and the subdued outlook for global economic growth. U.S. crude dipped 0.17% to $85.58 a barrel. Brent crude fell to $91.9 per barrel.
Recession Gamble
Central banks are intent on driving the world economy perilously close to a recession. The US Federal Reserve and its peers around the globe now make no secret about their determination to win the fight against soaring prices — even at the cost of seeing their economies expand more slowly or even shrink. About 90 central banks have raised interest rates this year, with half of them hiking by at least 75 basis points in one shot. Now policymakers are starting to publicly acknowledge that the higher they raise rates, the bigger the risk of harming growth and employment.
FTSE100 live outlook prediction analysis for 20th September 2022
Despite the bank holiday yesterday we had a bit of a bull Monday, helped by the late rally in the US as the S&P500 gained a decent amount of ground to test the 3913 resistance level where we have the 200ema on the 30m chart, and the key fib for today.
As such the various 2 hour charts are bullish, now so we may well get a dip rise dip play out today, though to start with its going to be choppy ahead of the Fed, BoE and other central banks and the mooted rate rises - markets waiting to see how large the increases are.
Initial resistance is at the key fib and R1 level to start with today, at the 7305 area, so if we get an initial rise to here to start with then we may well see a pull back from here. That would also align with the S&P500 stalling at the 3915 resistance levels as well.
Above this the bulls will be looking for 7330 R2, then more likely 7354 which is the next daily level of note. 7384 is then the daily coral line and has also just changed to red (bearish trend) so should we see this level then a short here is worth a go.
For the bears, they will be looking to drive this down to the pivot and the 30m coral at least to start with as we have decent support here - 7254 is the level to watch for support today. A break of this though and then we will likely see the Hull MA at 7223, and 7193 possibly, if they break Fridays low at 7206.
I am thinking that we may well see the 7250 level hold though on any dip down. The US bulls will certainly be keen to build on the rise yesterday, though with a potential bear Tuesday back drop they will have their work cut out.
S&P500
So, bulls looking to defend any dip down to the 3880 level as we have initial support here, and then the bulls will definitely want to defend Monday's low at 3830 below that. A push past 3915 will likely lead to the 3935 R1 level, and should they get past this then the short term bearishness we have seen will likely end for a few sessions and a rise back up towards 4000 may well play out. To start with its choppy ahead of the FOMC and the interest rate rises (and BoE as well).
2h support is at 3838 so should we see that line tested soon then may well be worth a long here too. That said, be cautious with holding longs for too long as the second half of September is usually bearish.
Good luck today.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Friday saw London's markets sink into the red again and the pound tumbled amid economic gloom ahead of central bank meetings next week. The FTSE 100 ended the day down 0.6pc at 7,236. Expected rate rises and worries over a lengthy recession have kept up general pessimism which only grew after a weak opening in the US markets. The pound also plunged to below 1.14 dollars for the first time since 1985 after weak retail sales data in the UK for August although it recovered some ground later on Friday.

Stocks extended gains in Asia after a rebound in the final hour of New York trading as investors shifted positions ahead of a flurry of central bank decisions this week led by the Federal Reserve. Asian shares edged up in early trade on Tuesday following a rebound in the final hour of New York trading as investors turned their attention to an expected hefty Federal Reserve interest rate hike this week to tackle inflation.

MSCI Inc.’s Asia-Pacific equity index advanced for the first time in six days. Hong Kong stocks rallied amid a report that Hong Kong plans to relax Covid curbs for travelers. Japan’s Nikkei 225 earlier jumped by as much as 1.2% after traders returned from a holiday. S&P 500 and Nasdaq 100 futures edged higher.

Treasury 10-year yields hovered near 3.5% while yields on the more policy-sensitive two-year rate hit the highest since 2007 and are poised to crack above 4%, amid fears that an overtightening of monetary settings raises the odds of a hard landing.

Investors are on tenterhooks as they await policy decisions that are expected to bring hefty rate hikes from the US, UK and Sweden. Decisions are also due in Japan, Switzerland, Indonesia, Norway and the Philippines, among others.

Traders are betting the Fed will hike by 75 basis points Wednesday, signal rates are heading above 4% and will then pause. The long hold strategy is rooted in the idea the central bank would avoid the disastrous stop-go policy of the 1970s that allowed inflation to get out of hand.

On Monday, Wall Street’s main indexes closed higher after seesawing during the session as investors wait to see how aggressively the Fed will hike interest rate hikes at this week’s policy meeting.

The S&P 500 and the Nasdaq Composite rebounded after logging their worst weekly percentage drop since June, as markets were fully priced for a rise in interest rates of at least 75 basis points at the end of Fed’s Sept. 20-21 policy meeting.

Markets are priced for rates to climb as high as 4.5% by early 2023, compared with the Fed’s current 2.25%-2.5% policy rate range. That is high enough to take a bite from growth, and is holding down bond yields at the longer end of the curve.

The Dow Jones Industrial Average rose 0.64%, the S&P 500 gained 0.69% and the Nasdaq added 0.76%.

It is not just in the United States that interest rate rises are expected. Most of the central banks meeting this week - from Switzerland to South Africa - are expected to hike, with markets split on whether the Bank of England will move by 50 or 75 basis points.

Oil prices also dropped, pressured by the stronger dollar, and the subdued outlook for global economic growth. U.S. crude dipped 0.17% to $85.58 a barrel. Brent crude fell to $91.9 per barrel.

Recession Gamble
Central banks are intent on driving the world economy perilously close to a recession. The US Federal Reserve and its peers around the globe now make no secret about their determination to win the fight against soaring prices — even at the cost of seeing their economies expand more slowly or even shrink. About 90 central banks have raised interest rates this year, with half of them hiking by at least 75 basis points in one shot. Now policymakers are starting to publicly acknowledge that the higher they raise rates, the bigger the risk of harming growth and employment.

FTSE100 live outlook prediction analysis for 20th September 2022

Despite the bank holiday yesterday we had a bit of a bull Monday, helped by the late rally in the US as the S&P500 gained a decent amount of ground to test the 3913 resistance level where we have the 200ema on the 30m chart, and the key fib for today.

As such the various 2 hour charts are bullish, now so we may well get a dip rise dip play out today, though to start with its going to be choppy ahead of the Fed, BoE and other central banks and the mooted rate rises - markets waiting to see how large the increases are.

Initial resistance is at the key fib and R1 level to start with today, at the 7305 area, so if we get an initial rise to here to start with then we may well see a pull back from here. That would also align with the S&P500 stalling at the 3915 resistance levels as well.

Above this the bulls will be looking for 7330 R2, then more likely 7354 which is the next daily level of note. 7384 is then the daily coral line and has also just changed to red (bearish trend) so should we see this level then a short here is worth a go.

For the bears, they will be looking to drive this down to the pivot and the 30m coral at least to start with as we have decent support here - 7254 is the level to watch for support today. A break of this though and then we will likely see the Hull MA at 7223, and 7193 possibly, if they break Fridays low at 7206.

I am thinking that we may well see the 7250 level hold though on any dip down. The US bulls will certainly be keen to build on the rise yesterday, though with a potential bear Tuesday back drop they will have their work cut out.

S&P500
So, bulls looking to defend any dip down to the 3880 level as we have initial support here, and then the bulls will definitely want to defend Monday's low at 3830 below that. A push past 3915 will likely lead to the 3935 R1 level, and should they get past this then the short term bearishness we have seen will likely end for a few sessions and a rise back up towards 4000 may well play out. To start with its choppy ahead of the FOMC and the interest rate rises (and BoE as well).

2h support is at 3838 so should we see that line tested soon then may well be worth a long here too. That said, be cautious with holding longs for too long as the second half of September is usually bearish.

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 FTSE100, 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 FTSE100, DAX40, Gold and S&P500.
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 with just your email address

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