FTSE 100 Resistance 6794 | Support 6734 | NFP 180k forecast

FTSE 100 Support 6734 6723 6717 6711
FTSE 100 Resistance 6772 6796 6798 6810 6822 6831

Good morning. Well we got the new monthly money rise to start with yesterday taking the FTSE up to 6827 before the bears appeared and we experienced a 100 point drop. Unfortunately both the FTSE and Dax short orders missed by mere points which was rather annoying. The long at 6770 managed to get a few points on the way down as we did get a 20 point bounce there. Of course, its NFP* Friday today, with the estimate being 180k, slightly below last months 255k.

*Non-farm payrolls is the most closely watched indicator in the Employment Situation, considered the most comprehensive measure of job creation in the US. Such a distinction makes the NFP figure highly significant, given the importance of labor to the US economy. Specifically, political pressures come into play, as the Fed is responsible for keeping employment in a healthy range and utilizes interest rate changes to do so. A surge in new Non-farm Payrolls suggests rising employment and potential inflation pressures, which the Fed often counters with rate increases. On the other hand, a consistent decline in Non-farm Employment suggests a slowing economy, which makes a decline in rates more likely.

US & Asia Overnight from Bloomberg

Moves in financial markets were mostly modest amid the countdown to key American jobs data that’s seen shaping expectations for the timing of the next U.S. interest-rate hike. South Korea’s won strengthened and oil pared this week’s slide.

The MSCI Asia Pacific Index was little changed on Friday, extending a three-week period of stability in which price swings have been the most muted in at least a decade. The won led gains among major currencies as South Korea’s central bank raised its estimate of second-quarter economic growth. Crude traded below $44 a barrel and was set for its biggest weekly drop since January, having tumbled after U.S. stockpiles data reinforced concern about a glut. Gold declined this week and U.S. Treasuries advanced.

Asian equities are stuck in a rut as the specter of the jobs data deters investors from making bold bets. Federal Reserve Vice Chairman Stanley Fischer said this week that upcoming economic reports would determine the trajectory of interest-rate increases, having previously highlighted Friday’s nonfarm payrolls update as being of importance. The figures will come out ahead of this weekend’s Group of 20 summit, with leaders of the world’s biggest economies set to meet in China.

“All eyes are clearly focusing on the non-farm payrolls data,” said James Woods, a strategist at Rivkin Securities in Sydney. “Even if we do see a strong reading in the payrolls, I don’t really expect that the Fed would act in September. The recent data have been improving and its certainly a good sign but it’s not enough yet to suggest that they have to hike imminently.”

Bets on a September rate increase were reined in on Thursday as a U.S. manufacturing gauge signaled a contraction for the first time in six months. Futures prices indicate a 34 percent chance of a hike this month, down from 42 percent at the end of last week.

Stocks

The MSCI Asia Pacific Index was down less than 0.1 percent as of 1:15 p.m. Tokyo time as gains in consumer staple providers countered losses in raw-materials producers. Australia’s S&P/ASX 200 Index was the biggest loser among regional benchmarks with a 0.9 percent decline and Hong Kong’s Hang Seng China Enterprises Index led gains with a 0.8 percent advance.

CK Hutchison Holdings Ltd. jumped as much as 4.3 percent in Hong Kong after receiving European Union approval for a merger involving its Italian assets that will create Italy’s largest wireless provider. Alumina Ltd. shares climbed the most in seven months after settling a dispute with its joint-venture partner Alcoa Inc., a move that may spur takeover interest in the Australian company.
Futures on the S&P 500 Index were little changed, while contracts on the U.K.’s FTSE 100 Index were up 0.2 percent.

Currencies

The Bloomberg Dollar Spot Index was steady after slipping 0.4 percent on Thursday, its first loss in a week. U.S. jobs growth slowed to 180,000 last month from 255,000 in July, according to a Bloomberg survey of economists.

“There is potential for markets to whipsaw should we see robust U.S. jobs data tonight,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “A stronger U.S. labor market isn’t new news for the Fed or its watchers, rather, it is areas such as manufacturing and retail that are currently causing concern, not to mention a generalized lack of inflation. But nonetheless, payrolls data is traditionally a big market mover, so buckle up.”The won strengthened 0.5 percent, trimming its weekly loss versus the greenback. Bank of Korea said gross domestic product increased 3.3 percent from a year earlier in the three months through June, more than its previous estimate of a 3.2 percent expansion.

Commodities

Crude oil climbed 0.5 percent in New York, after tumbling 9.4 percent over the last four days. U.S. inventories climbed last week, keeping supplies at the highest seasonal level in at least three decades, official data showed Wednesday. OPEC members plan to meet this month in Algiers to discuss action to stabilize the market and Saudi Arabia has saida cap on production would be positive.

Gold was headed for a 0.5 percent weekly loss, having touched a two-month low in the last session. The metal retreated since mid-August as hawkish comments by Fed officials spurred speculation a U.S. rate hike is coming, eroding the appeal of assets such as bullion that don’t bear interest.

Industrial metals rose on Friday in London, led by a 1.1 percent advance in nickel. Lead, tin and zinc all climbed to levels last seen in the first half of 2015, having been buoyed by data on Thursday that indicated manufacturing is picking up in China, the world’s second-biggest economy.

Bonds

U.S. Treasuries were set for a weekly gain, with the two-year yield having fallen six basis points to 0.79 percent. The rate increased by 14 basis points over the prior two weeks.

“The Fed has kept open the possibility of raising rates in September, but it’s also said that it’s data dependent — so the risk of something disappointing is high,” said Janu Chan, a senior economist at St. George Bank Ltd. in Sydney. “It’s about jobs and inflation. Payrolls is the most important piece of data that will guide the Fed.”

Japan’s 10-year bonds declined this week and their yield rose by three basis points to minus 0.045 percent, set for the highest close since March. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

As mentioned its NFP Friday today so could be fairly choppy. Lots are watching this NFP result to give an indication of a September US interest rate rise. We might see a buy the rumour, sell the news sort of day, though its a good day to lower the stakes or avoid trading if you don’t fancy a gamble! Its been fairly flat overnight so there are not a lot of clues, mainly as we are waiting for NFP. That said, we have the bottom of the two Bianca channels at 6734 and 6723 so if we dip down to this area we may well see a bit of a bounce from here – this area also held fairly well yesterday.

Generally I am still feeling bearish with the bigger picture and shorting the rallies still feels the safest bet – for a decline down toward 6570. The bulls will be keen to rise above 6800 and 6810 where we have the 10 day Bianca, whilst 6855 is still the main area of resistance. Above this opens 6900 up for a test, though it looks more bearish at the moment.

80 Comments

  1. Morning Guys !! been behaving nicely so far before NFP. Last evening Long from 6730 closed @ 6765. Been Long again this morning fron 60 will be holding till NFP and then as Nick said sell the news! good luck

  4. Well it did come back Si, I Pulled out a few of my longs, added some shorts. Will wait for NFPR and fold or hold.

    1. Just changed my trading plan, to stop trying second guess a top or bottom.. Be patience and wait for a market structure so you know where to place a stop..
      Been a tricky week so far, nibbling points here and there…
      Will not be adding to my ftse short….

  6. hey all.
    Short ftse at 6817 stop 50 (not intending on hitting stop without averaging short position). Rough target 6781, though I suspect I’ll pull the plug at 6800, or be in and out a few times as it bobbles around.

  7. May add a short order 20pts below latest price on gbp/usd. If it’s good NFPR it will pull me in. No doubt will whipsaw me!

    My prediction 6850-70 top, then dump to 6770. Like Nick said everyone is buying the rumour.

    1. My scenarios:
      1. big beat > 200 – sep rate rise likelihood definitely up – big sell off
      2. meets expectations ~ 180 – fed unlikely to move in sep, so spike up (yippee, not rate rise) followed by a selloff (oh dear the us maybe isn’t doing so well).
      3. below expectations – same as 2

      so mostly expecting to go short / fade any move higher…

      1. I agree…

        My plan is to try and add some shorts on the up spike and pull my remaining longs. Then cash in on the fall.

        They say you make when you buy, how true. The entry point is more key than the exit point IMO.

        Good luck, we can all be sure it will be scenario 4, the one none of us expected!

  9. Good look everyone 🙂
    Morko – interesting to see how you get on with the pre set orders… (any stops on them ?)

  10. This reminds me of NFP about a year ago. Everybody was expecting a good NFP and it turns out bad and the market rallies.
    ive placed a £ 50 /pp at 6800 to buy.
    just got hit. so hopefully i’ll be able to recover some monies i lost in july.

      1. Its a hard wait till the open. cant see this selling off.
        hopefully i’ll be able to add another 50 around open
        hopefully we will see 6900. but still ready to dump if it chaqnges

        1. its at 6849. have not added yet. ill wait till us open. hope it,ll allow me to add at 6850.
          just hipe it does not come down too much.
          have placed stops at b/e just in case

  11. Afternoon all,another chance for Commodities,Currencies and Companies the world over to value themselves in accordance with how many Meth heads are delivering Pizza in Memphis.Great.

  15. Might just stop trading and just do the NFF , you could make a living, not know it to go down on the numbers , good or bad news..

  17. Topped up FTSE short 6862 and stuck a short on sp500 2184.

    I think when everyone digests this data and realises it gives the overly cautious Feds an excuse to leave us rates we will see drop….IMHO

    George – stick at it, you called some good trades this week. No one ever gets it right, it’s a games strategy and averaging to make a few points from the irrational nature of the markets.

    1. Morko

      I’m learning as I go along..didn’t think it would go up like this…I’m sorting on my hands…think I’m going to look at mt4 software and put in my strategy..let it trade in automatic. .low £ per point..

      1. Hi George the IG Pro Real chart is good for automation – alot easier than MT4/5.

        None of us thought (except WSF maybe) it was going to go up, or at least by that amount.

  19. No Si, it’s comical. Yesterday a dump on good days, today it rockets on average data????

    I’m in £20 short now which is a lot for me. Which I kept my longs in longer!!!

  27. Well i hope 6570 is still on the cards? 🙂

    I am still puzzled by the rally – any one got any clues? save me researching it later.

    Si – Im sorry you took a hit, i sometimes think i should create a program that does the opposite of what i do, we would all be minted.

    Good Luck

  28. Got to love IG.

    Now the FTSE has risen 2.5% IG flash up a buy indicator at 18:00 on a friday – Really?

  29. yeah all a bit odd today – usd up and stocks up… hmm
    After 29 winning days I took a big hit today – chasing the quiet dow at the moment – and not really getting anywhere.

  30. Morning all,thought I would try and post something “helpful” lol.The trouble is that unless you share a point of view … eg if Hillary wins then 2017 will be a Bull year : it is always a Bull year in yr 1 of a Democratic President.That’s not a lot of use.Might as well talk about Astrological Cycles saying an Inflexion point is close and Mercury being Retrograde or what it seems to mean when Soros and Paul Tudor Jones make it clear they are agressively short as talk about last wednesdays Dow Volume or about Hammers vs Hanging Men vs Shooting Stars or running a time based stop in this mkt,something I believe Tudor Jones has done in the past,or getting stopped 3 times in a row last week,but having a good one.That’s probably as irritating as stuff about stats and backworking your S/L’s to a fixed number of points would be for some people today.
    Chippy makes some great trades and I cant understand any of them,he doesnt really try to explain them either,maybe because they are mkt view based so until he does 🙂 here is a technique I have been playing with for a couple of weeks.
    I think it is helpful because it will force anyone to think about what they are doing when they jump on momentum with Fomo in full flow.This kind of thing will make anyone more conscious of filtering the trades they take and that is probably the important bit.I’m not saying this is anything special,it’s just a free online article but his reasons for why the pattern works are worth thinking on too.
    I ran this 3 times last week,made money with it on the 15 min chart, I didnt use his 13 and 20 Ema’s and S/L advice last week,used what I had on screen anyway,9 and 3 Ema,Bollinger Bands (set on 10) and I ran a 20 point numerical S/L on the Ftse with this,I got 1:1 once,more once and less once.One of the trades was pre open Thursday morning on the Ftse to the high before the gap closed lol.I always have a 15 min chart open and it’s easy to see things on it when I am playing with something,that’s the only reason for using that chart.The main thing is you can save a lot of money by having reasons not to jump on momentum and reasons to exit eg I’m pretty sure Hugh told me to get out of an RSI scalp if it went back to the level it was at when I took the entry for the same reason.Have a good weekend everyone all the best Si and if this turns into a thread of good links that’d be nice too 🙂
    http://www.learntotradeforprofit.com/candlestick-acceleration-pattern/?

    1. Hey WSF,
      Thanks for taking the time to post, will have a read of that article.
      Lots of people in pain yesterday, though I have to say, the movement of the ftse grinding up in a tight channel always makes me think it will keep going and smash through all support – I never short into that now (other than quick scalps perhaps). The same channel appears in the moves down too – seem to recall one happening on Thursday.
      Also, the headline NFP was a miss by most reckoning and added to the weak manufacturing data from previous day gave a fairly good reason to believe rates won’t hike in September… Over the past few months (/years?) the indices have been driven by USD rate expectations and / or crude oil prices – low rates -> weak USD -> strong indices. Sooo, seeing the indices blast up probably shouldn’t have come as a surprise to people (bad news IS good news if you can get cheap credit for longer (until the eventual system collapse of course)).
      The thing that caught me out was that I jumped onto trading USDJPY (short) on the basis that no rate hike equals weaker dollar – I could have gotten out of the trade with a profit even though I was totally on the wrong side, but my background ‘understanding’ was biasing my view, so as the dollar strengthened, I kept seeing it as just part of a pullback / profit taking move and I failed to take the opportunity to get out as it went my way (down) briefly during a retrace to the 38.2 fib level. I fully expected it to reach the 50% and more…
      Several good lessons costing 21k that I’m taking away from this (nothing that hasn’t been said before):
      1. Don’t be greedy (eg could have taken at least some profit at 38.2)
      2. If I am being greedy, predefine a stop that makes the dynamic Risk / Reward of the gamble clear to me in that moment.
      3. Trade the price action, not your belief / bias. I’ve actually been very good at this recently, but this one seemed so clear cut.
      4. If you don’t understand the ‘why’ of a fundamentally driven move and you’re on the wrong side, just try to get out at any opportunity.

      Hope something in that lot might be helpful to someone else.
      If anyone can explain how stocks thought no rate hike, yet the dollar thought rate hike, please enlighten me – I’ve not seen many articles mention the paradox yet!

      Cheers

      1. Hey inoodle,yes,low volume grind ups.The only difference between noticing the right things and noticing the wrong things,with “understanding”or not, is whether it makes money I guess 🙂 .That turn off the 50sma Dow daily last week fitted stuff and seemed right,but in late June (which I dont remember)playing that would have made 1:1 in mid July for anyone who had a 700 odd point Stop Loss 🙂 which I reckon is what Banks do really lol.Bianca 10,20 and 50 trend channel Support converged on the Ftse last week too and thanks to Nick (and his pdf) Bianca 20 levels are highlighted,still on a different day with different participants and Computers running their other trading programmes… lol.That just makes it about averages more than individual trades though 🙁 Richard Dennis ran 1600usd into 200 mill in 10 yrs with a 35% win rate trend trading,so even with smaller % profits a rate that is higher should only fail to produce something good if the person using it stuffs up their money management,so that’s good.
        http://bigpicture.typepad.com/comments/files/turtlerules.pdf
        It’s worth reading what Paul Rotter said about scalping and trading lessons,before he moved to Singapore to manage institutional money and altered his presentation for that mkt.I had some Pdfs of stuff he said,but lost them in a Comp collapse.
        This is recent,but still interesting
        https://mahifx.com/mfxtrade/blog/an-interview-with-paul-rotter-adapting-to-survive
        Ages since I looked at Fx,but that whole thing with both sides of a pair and who might be doing the most to devalue their currency at any given moment is very confusing nowadays 🙂 this week we have
        https://www.dailyfx.com/forex/fundamental/forecast/weekly/eur/2016/09/03/All-Eyes-on-ECB-Extension-of-QE-or-just-More-Wait-and-SeetofJS.html

  31. Great write ups WSF / Inoodle
    I learnt a few things yesterday also…stick to your trading plan.. don’t just short/long on trying to second guess the top ( Friday ) or bottom ( Thurs)…

    I jumped in on a ftse short @ 6785, didnt look at my trading plan, just on the wim that I thought the price was to high.. bad mistake… One thing that I stuck to is
    ” No one should do is add to a losing trade…..”

    Also when the price moves in your favour by 10 points, put your stop in at breakeven and let your profit run….

  32. Just wanted to say thanks guys for the above posts. Find them helpful. Will try and do the same when get something valid to put up.

  33. Hi chaps, great reading. I love this forum for the great sharing you guys give.

    I’m stuck in FTSE short, I averaged all the way up but can’t really go in again. I think it will hit 7000+ Although latest news from T May warning Brexit issues and that of the Japanise may swing the Bears into force.

    It’s funny how 24hr can change your stance as i think we were all Bear on Thursday.

    1. I’m trapped in a short also @ 6800 , I have just hedge again by longing the DOW..
      Would love to see them both go up next week…

  34. Hi Guys,

    I may be missing the mark here but Friday’s insane jump appeared to me to be well overdone by 6855 anyway, the comments out of the G20 over the weekend have been pretty strong and I suspect this will bring brexit back to life for the markets come tomorrow morning….. Thoughts?

    The pump came and this could be the catalyst for the dump that followed. The US Indices didn’t jump anywhere near as much in percentage terms (the Dow managed 0.5%) on the back of its home countries employment report here we are seeing the FTSE extend up some four times as much off the same report? Something doesn’t sit right and it looks like games to me. Notwithstanding the fact the Dow and other US indices are sitting just below record highs and the FTSE started Friday a substantial distance away from its record highs; economically the uncertainty here in the UK / Europe would explain why we aren’t within a hairs breadth of such highs.

    I suspect that Friday stinks and Monday will see a sizeable correction, whether or not the 6800 round number will emerge I don’t know.

    I myself am stuck in two big short positions at 6855 and 6875, so I just need a crack lower at the open to get out, if we get a convincing drop below 6900 overnight I may well hold out for 8am and see what our friends in the city thinks of the gun that has been held to our head in China.

    1. I agree, I can see no reason for a rise….but we all know logic has little influence in the market.

      If it dumps to 800 I will be punching the air with joy. I have set limits to pull a few pts above each support down to 800?

      I will leave a few in as I am convinced this market is headed for a turn south. The global economy and market disconnect has to correct at some point…but when?

  35. The G20 / Brexit / Trade deal issue is growing legs in th media with a very negative spin…. Hello gap down!

  36. Just a comment after a few hours of analysing
    1. Market looks very much like heading to 7000
    2. 6870 / 60 should hold for any down moves
    3. without the US in play on monday – ftse as well as all the EU will try to anticipate a US rate to remain stagnat till atleast 2017
    4. Fridays move was a True Breakout and this type of breakout will move a few 100’s points
    5. all in all – a positive day is being signalled by the market and any breakout out of 6930 – is where I plan to load up

    1. oh forgot to complete my other thoughts
      1. weak dollar coming up
      2. this should give a boost to commodity prices
      3. ftse with high no. of miners will get a boost
      4. banks with a low us & subsequent eu & uk rates will signal more qe & this should boost bank shares
      5. germany exports will also be helped and again a positive spin
      6. full working week coming up and money will be flowing in to invest so large investors will buy into commodities and the banking sector over the coming week
      with all these fundamental and spurious positive points for the market – its a brave man who is going short, and as far as my trading is concerned – a breakout from 6930 is where i am looking to buy
      anyway this is my thoughts and i hope to act accordingly

      1. Some damn interesting points there…
        Be very interesting to watch at the open tomorrow – I guess I expect a pullback to the support you mention and then another push up – really only basing this on your points though.

  38. I’m sorry JSft, I think you’re completely wrong on this one and the opposite of what you have said is true, in my personal opinion. It’ll be interesting to see how this plays out.

  39. I have cut my DOW long hedge for +22.. Seems that it doesnt want to be up 0.5% like the FTSE/DAX… Half expecting a gap close on the FTSE..

  40. JSft some good points raised.. Thanks for posting…
    My view is that we are heading for 7000, even though I still have a open short on FTSE @ 6785.. The short term trend is up…

    1. Would say if you are buying at these levels and planning on holding, make sure if spreadbetting you are placing a 100 point guareenteed stop…

  41. Morning. i added at 6930 to my already heavy short but with a stop at 950.
    I have also shorted gbp/usd 13317 with guaranteed stop set at 13350.

    I am now in bet mode as I have ignored plan. Such differing opinions on here show that the the FTSE is moving irrationally and we can all only speculate as to why or where it may go.

    GL chaps.

    1. I to added to my short @ 6920 again on a wim that price is to high me thinks.
      10 minutes later , closed the position for +10 as I had broke my trading plan of adding to a losing trade… Still short @6785..

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