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The bounce has started | Massive U Turn | 6990 7039 resistance | 6930 6910 6867 support

#1 · 18th October 2022, 10:30 am

Quote from Nick on 18th October 2022, 10:30 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Stocks extended a rebound and major currencies rallied versus the dollar after the S&P 500 closed above a key technical level and negative pressure on UK markets eased. A gauge of Asian equities rose, led by technology stocks in Hong Kong, while US equity futures advanced about 2%. Shares of Chinese electric-vehicle maker BYD Co. jumped more than 6% on an expected surge in third-quarter profit, putting other vehicle makers in the country in focus.
In the UK, taxes are set to rise to their highest level since 1950, experts have said, after the new Chancellor Jeremy Hunt scrapped planned cuts in one of the biggest fiscal U-turns in British history. Traders now expect the Bank of England to raise its headline interest rate to a peak of no more than 5.25pc next year, down from the 6.25pc which was anticipated at the worst moments of the squeeze in markets following the mini-Budget in a boost for millions of mortgage holders.
The pound jumped and the cost of government debt fell sharply as the Chancellor abandoned the vast majority of Liz Truss's mini-Budget amid rising hopes of a return to fiscal discipline. It sent the yield, or interest rate, on 10-year gilts tumbling 0.41 percentage points to below 4pc, while the yield on 30-year gilts dropped 0.48 points to 4.37pc, both the biggest ever daily falls. Meanwhile sterling rose more than 2pc to above $1.14.
Asia stocks nudged higher on Tuesday as the dramatic U-turn in British fiscal policy brightened investor sentiment, while the U.S. dollar took a breather at its lowest levels in more than a week as a revival in risk-taking lowered its appeal.
Britain’s new finance minister Jeremy Hunt abandoned most of Prime Minister Liz Truss’ economic plan that had led to a political maelstrom fuelled by market turmoil, with the pound hitting record lows in recent weeks and the Bank of England being forced to intervene.
Morgan Stanley analysts said the fiscal U-turn was likely to have significant implications for the BoE as its economists now revise their call for the November meeting to a 75-basis-point rate hike, from 100 basis points. Hunt’s move led to Britain’s government bonds, currency and shares soaring, also lifting Wall Street.
Given such a wholesale scrapping of PM Truss’ Tory leadership promises, it remains an open question how long Truss will remain in power, said Tapas Strickland, head of market economics at National Australia Bank.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.43%, while Japan’s Nikkei was up 0.6%. S&P 500 futures and Nasdaq futures were both up 0.8%.
China’s stock market opened nearly flat and edged up 0.12% to 3,088.54 as the Chinese ruling Communist Party’s twice-a-decade congress remains in session this week.
In currency markets, the U.S. dollar retreated against most currencies overnight, with sterling subdued early on Tuesday after gaining 1.6% in the previous session.
Brent was up 0.08% to $91.69 a barrel, while U.S. crude rose 0.04% to $85.49 per barrel.
FTSE100 live outlook prediction analysis for 18th October 2022
A decent bull Monday yesterday that may roll into a bit more optimism for today as well. Overnight we have risen to just shy of the 7000 level and I am still advocating buy the dips for the moment. Will the seasonality play out with the usual bullish period starting about now till the year end? Santa rally stand by!
Initially we may see a bit of a dip down towards the daily pivot at the 6910 level, the main reason being that we are just testing the top of the 10d Raff channel as I write this at the 6990 level, but I am expecting dips today to hold. The market should be buoyed by the Governments U-turn after the mini budget as they blamed that for the recent drops. It therefore follows that undoing all that would lead to a rise. But then again, the markets are funny things and we were due to drop early to mid October anyway, irrespective of a mini budget!
Sterling has also been heading for parity for years and the mini budget just gave it that final little push to get the headlines!
Initial resistance is also from R1 at the 6988 level with R2 at 7039 above that looking like it may well get tested today. That would tie in with a rise on the S&P500 to the 3774 level which also looks likely. At that point then we may well see the bears have another go, on both the FTSE100 and the S&P500.
Support wise, the 30m coral is now green and has support at the 6930 level, and then the 200ema at 6901 - so there are a cluster of supports in this area and if we do get a drop down to these then I would like to see them hold.
Looking at the S&P the bulls will want to defend any drop down to the 3680 area as we have the green 30m coral there for that. Below that then the 2h Hull MA support is at the 3650 level and a level that would more than likely see a bounce if it got that low. The top of the 20d Raff channel is also at the 3775 level, which is another reason that I think we could see some profit taking here. Generally though dips will likely be shallow now and get bought up. Get your bullish mindset into gear for the rest of the month!
Good luck today!
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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.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Stocks extended a rebound and major currencies rallied versus the dollar after the S&P 500 closed above a key technical level and negative pressure on UK markets eased. A gauge of Asian equities rose, led by technology stocks in Hong Kong, while US equity futures advanced about 2%. Shares of Chinese electric-vehicle maker BYD Co. jumped more than 6% on an expected surge in third-quarter profit, putting other vehicle makers in the country in focus.

In the UK, taxes are set to rise to their highest level since 1950, experts have said, after the new Chancellor Jeremy Hunt scrapped planned cuts in one of the biggest fiscal U-turns in British history. Traders now expect the Bank of England to raise its headline interest rate to a peak of no more than 5.25pc next year, down from the 6.25pc which was anticipated at the worst moments of the squeeze in markets following the mini-Budget in a boost for millions of mortgage holders.

The pound jumped and the cost of government debt fell sharply as the Chancellor abandoned the vast majority of Liz Truss's mini-Budget amid rising hopes of a return to fiscal discipline. It sent the yield, or interest rate, on 10-year gilts tumbling 0.41 percentage points to below 4pc, while the yield on 30-year gilts dropped 0.48 points to 4.37pc, both the biggest ever daily falls. Meanwhile sterling rose more than 2pc to above $1.14.

Asia stocks nudged higher on Tuesday as the dramatic U-turn in British fiscal policy brightened investor sentiment, while the U.S. dollar took a breather at its lowest levels in more than a week as a revival in risk-taking lowered its appeal.

Britain’s new finance minister Jeremy Hunt abandoned most of Prime Minister Liz Truss’ economic plan that had led to a political maelstrom fuelled by market turmoil, with the pound hitting record lows in recent weeks and the Bank of England being forced to intervene.

Morgan Stanley analysts said the fiscal U-turn was likely to have significant implications for the BoE as its economists now revise their call for the November meeting to a 75-basis-point rate hike, from 100 basis points. Hunt’s move led to Britain’s government bonds, currency and shares soaring, also lifting Wall Street.

Given such a wholesale scrapping of PM Truss’ Tory leadership promises, it remains an open question how long Truss will remain in power, said Tapas Strickland, head of market economics at National Australia Bank.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.43%, while Japan’s Nikkei was up 0.6%. S&P 500 futures and Nasdaq futures were both up 0.8%.
China’s stock market opened nearly flat and edged up 0.12% to 3,088.54 as the Chinese ruling Communist Party’s twice-a-decade congress remains in session this week.

In currency markets, the U.S. dollar retreated against most currencies overnight, with sterling subdued early on Tuesday after gaining 1.6% in the previous session.

Brent was up 0.08% to $91.69 a barrel, while U.S. crude rose 0.04% to $85.49 per barrel.

FTSE100 live outlook prediction analysis for 18th October 2022

A decent bull Monday yesterday that may roll into a bit more optimism for today as well. Overnight we have risen to just shy of the 7000 level and I am still advocating buy the dips for the moment. Will the seasonality play out with the usual bullish period starting about now till the year end? Santa rally stand by!

Initially we may see a bit of a dip down towards the daily pivot at the 6910 level, the main reason being that we are just testing the top of the 10d Raff channel as I write this at the 6990 level, but I am expecting dips today to hold. The market should be buoyed by the Governments U-turn after the mini budget as they blamed that for the recent drops. It therefore follows that undoing all that would lead to a rise. But then again, the markets are funny things and we were due to drop early to mid October anyway, irrespective of a mini budget!

Sterling has also been heading for parity for years and the mini budget just gave it that final little push to get the headlines!

Initial resistance is also from R1 at the 6988 level with R2 at 7039 above that looking like it may well get tested today. That would tie in with a rise on the S&P500 to the 3774 level which also looks likely. At that point then we may well see the bears have another go, on both the FTSE100 and the S&P500.

Support wise, the 30m coral is now green and has support at the 6930 level, and then the 200ema at 6901 - so there are a cluster of supports in this area and if we do get a drop down to these then I would like to see them hold.

Looking at the S&P the bulls will want to defend any drop down to the 3680 area as we have the green 30m coral there for that. Below that then the 2h Hull MA support is at the 3650 level and a level that would more than likely see a bounce if it got that low. The top of the 20d Raff channel is also at the 3775 level, which is another reason that I think we could see some profit taking here. Generally though dips will likely be shallow now and get bought up. Get your bullish mindset into gear for the rest of the month!

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