FTSE 100 outlook prediction analysis for 3rd December 2019
Global stock markets were rattled yesterday as Donald Trump sparked a new front in his trade wars, announcing plans to slap tariffs on steel and aluminium exports from Brazil and Argentina. In a tweet, the US president accused the two South American countries of “presiding over a massive devaluation of their currencies”.
Plans for a tariff that would have affected the two countries were scrapped last year, following talks between officials. The announcement shocked stock markets, sending European shares into sharp falls and pushing investors towards assets perceived as being low risk.
European markets took the brunt of the losses, with Germany’s DAX and France’s CAC falling 2.1pc and 2.0pc respectively in the worst day’s trading since early October. The FTSE 100’s losses were pared by a weakening pound, which continued to soften as polling showed a narrowing lead for Boris Johnson’s Conservatives ahead of next week’s general election vote. The blue-chip index closed down 0.8pc at 7,285.9.
Mining firms managed to hold gains during the day, following an initial rise prompted by Chinese manufacturing sector data that pointed to the highest levels of activity in factories since January 2017.
Meanwhile, Jair Bolsonaro, the Brazilian president, a Right-wing populist seen as a Trump ally, said he hoped the president could be convinced to change his mind on restoring tariffs on all steel and aluminium imports from Brazil and Argentina.
China’s restraint on the trade front notwithstanding, the S&P 500 Index fell the most in almost eight weeks on Monday partly thanks to trade tensions on other fronts. President Donald Trump reinstated U.S. levies on steel and aluminum from Argentina and Brazil, a move that served as a reminder to investors that the deadline for the next round of American tariffs on China — Dec. 15 — is quickly looming. Asian stocks looked set to fall Tuesday, with equities also hurt by disappointing U.S. factory data Monday. Futures in Japan, Australia and Hong Kong all pointed lower, and the yen is stronger. The risk-off mood spread to Europe, where shares had the biggest slump in two months. The dollar slid against most major peers, and ten-year treasury yields closed higher but off their intraday peak. A gauge of retailers in the S&P 500 dropped on Monday, joining broader market losses — even though Black Friday hit a record $7.4 billion in U.S. online sales. Elsewhere, oil rose the most in more than a week as traders sifted for fresh signals on whether OPEC and allied crude producers will tighten supplies when they meet later this week.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
That was a decent drop off yesterday after the initial rise with the new month money, though that only got it as far as 7400 before the bears were boosted and we saw a drop down steadily to the 7330 support. Unfortunately that broke and we are now just below 7300 with a drop down towards 7265 looking likely. THE S&P dropped off the 3156 level really well, helped by that news, to close the 3115 gap from a couple of Fridays back, and is now sitting on the bottom of the Raff channels. As such we may well see a small bounce from this area before a further slide down towards the 3097 level, and maybe as low at 3070ish before a bounce kicks in for a December rally.
For today on the FTSE 100 I am looking at 7265 as initial support as we have the bottom of the 10 day Raff here, and also the key fib level for today. If cable were to drop back a bit after yesterdays rise that will help the FTSE 100 bulls as well. Should the 7265 level be broken (and it could do as the ASX200 trended steadily down all session and we may follow that pattern) then the bottom of the 20 day Raff is still in play with support at 7197, and S2 at 7195. S1 is at 7243 though so we may well see a reaction there. There is also the FOMO element whereby the bulls won’t want to miss a December bounce, but I can see the early bulls being burnt yet.
If we do bounce from just below this 7300 level then the daily pivot at 7322 is the first hurdle, but with a cluster of resistance levels at the 7355 area then if we were to rise this far then a short and turn here looks like it would play out really well. The bulls failed to reach the 2 hour resistance level yesterday (that was the 7415 shorting level) and as that has now dropped to 7356 and falling steadily, so a rally to this area is worth taking a short from. If the S&P does drop down towards 3070 then the FTSE should get a bit lower before a bounce.
Slightly tricky one to call after the fall yesterday but watching the 7265 and then 7243 support levels, 7322 and 7355 for resistance. Momentum is with the bears now and we could be on for a further drop today for bear Tuesday after a bit of a dead cat bounce. Good luck for today.
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