FTSE 100 6933 6960 resistance | 6915 support | Asia holds near highs | Oil rises

FTSE 100 Support 6919 6915 6913 6887 6884
FTSE 100 Resistance 6930 6949 6960 6966 7013 7083

Good morning I hope you had a good weekend. The success at the Olympics should be creating a decent amount of feel good factor across the UK now, with us currently second in the medal table. Despite weakening data futures prices have held up and the bulls managed to hold above 6900 going into the weekend. Mainly helped by the likelihood of further stimulus and the Fed keeping rates on hold.

US & Asia Overnight from Bloomberg

Asian shares held near a one-year high and U.S. equity index futures advanced as rising oil prices supported sentiment following disappointing data in the world’s three largest economies.

The Topix index fell and the yen fluctuated after Japan announced slower economic growth than analysts forecast. The Shanghai Composite Index jumped by the most since May as speculation takeover activity will pick up outweighed Chinese figures showing a slump in new lending. The yuan weakened by the most in a month and Chinese government bonds rose. U.S. crude climbed for a third day, while nickel rebounded following its biggest one-day loss since July.

Global equities are holding near a one-year high as evidence of uneven growth in the world’s biggest economies both unnerves traders and fuels optimism that central banks will come to the rescue by way of stimulus. The probability that the Federal Reserve will increase interest rates this year eased to 42 percent in the futures market on Friday, from 49 percent a day earlier, after reports showed U.S. retail sales stopped expanding in July and wholesale prices unexpectedly fell.
“The U.S. economy may have lost a bit of momentum on its way up,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center. “Still, weak numbers mean concern over tightening recedes.”

Stocks

The MSCI Asia Pacific Index was down 0.3 percent as of 1:34 p.m. Tokyo time, after rallying 3.1 percent last week. Markets in South Korea and India were shut Monday for holidays.

The Topix index declined 0.5 percent as Japan posted an annualized expansion for the second quarter of 0.2 percent, below the 0.7 percent projected by economists. Officials in Asia’s second-largest economy are struggling to ignite price growth, with the central bank running negative interest rates and an unprecedented asset-purchase program, and the government also bolstering fiscal stimulus.

Hong Kong’s Hang Seng Index climbed 0.7 percent to a nine-month high after government data showed the economy expanded in the second quarter at the fastest pace since 2001. The Shanghai Composite Index advanced 2.4 percent to its highest since January after stake purchases by China Evergrande Group spurred takeover bets among property developers. The Shenzhen Composite Index climbed by the most since June after the Hong Kong Economic Journal reported that a proposed exchange link with Hong Kong will be announced as soon as this week and start in December.

“The road ahead may be bumpy but Asian equities ex-Japan are relatively undervalued, under-owned and under-appreciated,” said Vasu Menon, vice president for wealth management research at Oversea-Chinese Banking Corp. in Singapore. “It could do better than other regions over the next few years once we see greater stability in China and greater clarity with Fed policy.”

Futures on the S&P 500 Index added 0.1 percent after the benchmark slipped 0.1 percent from a record high on Friday.

Currencies

The yuan weakened 0.2 percent to 6.6480 per dollar in Shanghai. China’s broadest measure of new credit increased in July by the least in two years, a report showed late Friday. Data earlier that day showed factory output, retail sales and fixed-asset investment all slowed in Asia’s biggest economy.

Thailand’s baht reverse earlier losses to trade 0.2 percent stronger after the government reported better-than-expected economic growth. Gross domestic product expanded 3.5 percent in the three months through June from a year earlier, more than the 3.3 percent increase forecast in a Bloomberg survey.

Commodities

West Texas Intermediate crude climbed as much as 1 percent to $44.95 a barrel. It jumped 6.4 percent last week, its best performance since April, as Saudi Arabia signaled that it’s prepared to discuss stabilizing markets at informal discussions being held by the Organization of Petroleum Exporting Countries in September. Venezuela’s oil and foreign ministers will visit producer countries to lobby for price increases ahead of the talks, President Nicolas Maduro said.

Nickel climbed 0.6 percent in London, after sinking 4 percent in the last session. The metal used in stainless-steel making is the best-performing base metal in the second half and UBS Group AG rates it one of the best bets among commodities, saying a Philippine clampdown on polluting mines is crimping supply amid rising demand. Copper was up 0.3 percent and gold rose 0.2 percent.

Bonds

The yield on U.S. Treasuries due in a decade was little changed at 1.51 percent, after dropping by five basis points on Friday. The rate on similar-maturity Chinese debt dropped two basis points to 2.64 percent, the lowest since Bloomberg started compiling ChinaBond data in 2006. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

With the FTSE 100 holding above the 6900 level for the time being we could well be on for a rise towards the top of the 20 day Bianca channel for today at 6960. There is the small matter of the initial resistance at R1 at 6930 to start with, so we may well get a pull back from this level to start the day off. Support below is firstly at the pivot at 6913, so worth trying a long here for a possible bounce with a tight stop. If that fails to hold then 6888 is the next level – the 10 day Bianca is 6887 and 6884 is the 2 hour coral line. Also worth a long around this area.

I have plotted a pretty optimistic and bullish arrow from the pivot to test the 6960 level – I am 50/50 if we get this high today, but based on things remaining quite bullish on Friday its not impossible. Working out the various resistance levels below we are now starting to see ones just above the 7000 level – certainly weren’t expecting to be seeing those sort of levels cropping up when the UK voted to leave the EU. I haven’t put it in the trade plan but 7013 is worth a short if it were to get that high.

48 Comments

  1. Morning ! Excellent Arrows Nick !! Got rid of of all my short from last week though wasnt that bad since I managed to short 30 this morning ! and closed everything @ 15 .. Currently Long from 16 !! actually out @ 36 .. will take a break to see whats happening around .. good day guys

    1. I think am short biased around these levels though have to patient to pick a good spot hopefully !

          1. Sometime even the big fat accout is not enough for this crap rallies or drop which dun even make sense.. like Cameron was yelling about recession if brexit happened and it did but looking at the charts forget drop its not even showing retracement and hence I dun understand how this works .. is it more or less gamble ? Coz it excited me at some point to know about charts and study market and try to be aware of most of th ebig news. but I dun really like when it doesnt make sense to me .. if you know what i mean .. glad I didnt blow my account n this mess.. well yet .. lol

          3. I’ve covered the costs by scalping here and there, but I am bored of staring at this large loss. If only I’d gone that day many, many weeks ago!

  3. Morning chaps….I’ve had a couple of great trades long this morning but I’m now currently short Ftse from 37 and long cable…..

  5. morning all.
    I seem to be on the dax most of the time at the minute… liking the bigger ATR at the moment – ftse seems a bit slow.
    I was short dax all morning from 10730ish and decided to trade out of the losing position as it went up. Ended up with an average open of 10772 and closed out at 10774 once it turned and started down. I actually made good money on it as was at size once it turned and had picked up small points during the rise also. Wish I had left some on to run down another 35pts though!
    Thats me done for day, but will have a look around US open.
    GL and stay disciplined.

        1. I am curious to know until when when can you afford to run this show? Not that I dun want it to come down but cant really see anything atm

    2. If you’re bored, answer me this… I’m always confused about the client sentiment on IG. It’s 82% currently and everyone always says that, that’s a good indicator that the market will continue to rise – until the retail shorts are obliterated.

      However, why isn’t it the case that more and more people come into the market to short it, the higher it goes – on the assumption that it can’t keep rising/needs a pullback/is based on thin air/is overbought/etc?

      For example, say it rises to 7,200 and STILL hasn’t pulled back. Who buys at that level, would we not then see 99.9% short?

      1. actually I have the same question ? What I remember from one of my visit to seminar @ IG premises that the guy mentione that they have something called control biased strategy which mean :-
        scenario 1: 50 % people are short 50 % are long so we make money from people losing.
        scenario 2 : 80 % short doesn’t mean 20 % are long for some reason.
        and in this case people getting stop out are providing money to winning side.
        but if majority is on one side then they have control on how much ig as whole can afford to bet all together.
        I only think most of the time it carries on by the people who either dun pull out for long or hedge against their losing one.
        In short dunknow lol

          4. I dun remember who but somebody Longed in 5900 few months back for december future !! must be having fun at this level

          5. its funny how it works but i had a long @ 5950 week befre brexit for the same reason and was thinking of going to India for holiday til september but then there was this brexit commotion which made me cancel everything and had to pull out early. I wish ! I wish 😛

      1. tell me if it starts to go down will you hold till it gets to 6350 level or you planning to do some early exit as well ? Just curious

          1. Very quite today !! there is some data coming overnight via Japan … that can bring some volatility !!

  12. Should have stayed away this afternoon, not much direction, ended up giving some cash back. If in doubt, stay out 🙂
    See you tmrw, gl.

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