Inflation drops to 7.9% | 7535 7570 resistance | 7440 7411 support | BTFD

Inflation drops to 7.9% | 7535 7570 resistance | 7440 7411 support | BTFD


FTSE 100 trading prediction and analysis for 19th July 2023

The FTSE 100 closed 0.64pc higher at 7,453.69 after a last-minute rally, while the FTSE 250 midcap index has finished up 1.16pc at 18,618.22.

Asia's stock markets were mixed on Wednesday with growth concerns dragging on China's equities while shares gained in Japan and Australia after healthy U.S. company earnings and retail data added to hopes that a recession there can be avoided.

Dovish remarks from a European Central Bank policymaker boosted bonds and dragged the euro lower. Hotter-than-expected inflation lifted the New Zealand dollar a little and stoked some market nerves ahead of British CPI due later in the day.

Headline U.S. retail sales data came in below forecasts, but core sales which exclude food, fuel and building materials, rose a solid 0.6% in June and had economists lifting GDP forecasts.

FTSE 100 trading prediction and analysis

Great climb on the S&P500 yesterday from the 4515 support level and leading the charge for the bulls. UK inflation data has just come out while doing this analysis this morning and a drop to 7.9% will help buoy the FTSE100 for today and likely see a rise towards the 7530 resistance level if they can break 7480.

Above that the next daily level of note is the 7570 resistance level and if it were to get this high then it's worth a short here.

The FTSE 100 2h chart is now bullish again with support at 7460 so I would like to see this hold on any drops this morning, and then we have lower support at 7420. May not get that low but with the S1 and 200ema levels both here it should act as decent support.

7535 is the top of the 20d Raff channel, along with the first test of the red daily coral so I would expect a reaction here, unless the inflation news allows the bulls to power through. As mentioned back at Christmas time/early Jan, that was peak inflation hence all the unions trying to get their strikes in around that time. As spending also now slows down as people rein themselves in finally, demand drops and in turn inflation should fall, especially as raw material costs are also declining. Not sure we will get the fabled 2% any time soon though! 4% would be good by late summer, with interest rates at 6/6.5%.

So 7535 and 7570 (daily 200ema here) are my resistance levels but higher up than 7600 round number should also get a reaction. The July seasonality strength is playing out well after June's decline and generally it all looks pretty bullish once again.

Very much remains in buy the dip territory for the moment, and I am watching the S&P500 closely to see if the bulls can continue pushing up on that. It also has a bullish 2h chart as you would expect with 4550 support from the Hull MA for today.

Good luck today.

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