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September volatility continues with 6840 holding | 6930 6880 support | 6982 7060 resistance

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

The FTSE 100 closed at a two month low yesterday, following a sell off which roiled markets around the world on Monday.  The blue-chips dropped 0.8pc or 55 points from Friday's close, finishing the day at 6,908.5 points. On the positive side though the 6840 support level has held two tests now and overnight we have seen a decent climb back to 6950. A third test and a break of the 6840 level however may well see the slide continue to 6600.

The FTSE Mid-250 index closed down 257.2 points at 23401.72.

UK gas prices for next month surged 16pc on Monday, after Russia opted to cap additional flows to Europe.   State-owned Gazprom opted not to flow more gas to Europe via Ukraine in October, according to the results of an auction on Monday.

There were also signs that Russian flows via the key Yamal- Europe pipeline will remain limited, with traders booking just a fraction of the capacity offered to flow gas next month into Germany via the Mallnow compressor station. The cap on additional Russian supplies is leaving Europe starved for the fuel just as it needs to boost buffer inventories before the winter.

Oil prices have resumed their decline amid growing concerns over the health of China's economy that have sparked major losses in equities. US crude fell as much as 2.8pc to its lowest level in a week amid fears of a crisis in China's property sector that could impact the country's demand for oil.

FTSE 100 live outlook prediction analysis for 21st September 2021

With 6840 holding we may well see a bit of a bounce play out now and the bulls will of course want to recapture the 7000 level as soon as possible. If this is not to be a dead cat bounce then they will need to consolidate this rise today, and ideally break above the key resistance and support levels that were broken on the way down. Namely the 6940 level to start with, then 6991 above that.

If they are able to do that then we may well see a rise back past the 7000 level. Those 2 key levels mentioned are showing on the 2 hour chart and if we go down to the 30m to start today then we have the 200ema at 6977 aligning with R1. Thats splitting those two bigger timeframe resistance levels and as such we may well see an initial stutter here on any initial bounce and break of 6940.

The S&P500 is on resistance as I write this at 4380 and lends some weight to the dip and rise scenario playing out today. If the bulls were to break above the 7000 level today then we may well see R2 at 7059 and another test of the 25ema on the daily (that we dropped off on Friday) which is also at that level. That is the really key line that the bulls will need to break above. Seasonally September see's increased volatility (check) and bearishness (check) with the Bulls reappearing in early October. So far that seasonality trend is playing out. It's possible that they may appear slightly earlier at the end of September this year. We shall see.

For the bears they will be looking to push this down this morning and break, firstly the 25ema support on the 30m at 6925, then the daily pivot at 6904. If they manage that we have a green 30m coral at 6870 and rising and I would expect this to hold. It's certainly a good level for the bulls to reappear. Below that the key fib is at 6843 and there is that support once again, though as mentioned at the start of the email, a third test of that is more likely to break through and much lower prices beckon. Its really up to the bulls to consolidate today.

So, after a bear Monday (rare) we may well now get a bull Tuesday (rare too) just to flip things around!

Good luck today and watch for 6925 6904 and 6875ish as the main supports, 6970, 7000, 7059, 7126 as the main resistance levels.

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