No new policies | climbing infections | 6138 6110 support | 6185 6250 resistance

No new policies | climbing infections | 6138 6110 support | 6185 6250 resistance

FTSE 100 live outlook prediction analysis for 30th July 2020

The Fed announced no new policies in its statement. The central bank said it will also continue to buy about $120 billion in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending. Here’s a summary of the Fed decision:

  • The Federal Reserve warned the US recovery is tied to stemming the escalating health crisis as rocketing Covid-19 infections force states to reverse reopenings.
  • The central bank promised to keep interest rates at rock-bottom levels until confident that the world’s largest economy “has weathered recent events”.
  • Fed chair Jerome Powell vowed to do “what we can for as long as it takes to provide some relief and stability”.
  • Mr Powell added that a full economic recovery is unlikely until people are “confident that it is safe to re-engage in a broad range of activities”.
  • The policymakers voted unanimously to hold rates steady between a range of 0pc and 0.25pc and reiterated their pledge to use their “full range of tools to support the US economy”.

The major equity benchmarks in Europe finished flat today as traders await the update from the Federal Reserve. The FTSE 100 closed just 0.04pc higher while the FTSE 250 slipped 0.18pc.

Whatever It Takes

The Federal Reserve left interest rates near zero and vowed to use all its tools to support the recovery from an economic downturn that Chair Jerome Powell called the most severe “in our lifetime.” In a virtual press conference, he said: “The path forward for the economy is extraordinarily uncertain, and will depend in large part on our success in keeping the virus in check.” He also noted that there are signs that increases in infections are starting to weigh on activity. In its statement announcing the policy decision, the Federal Open Market Committee repeated prior language that the pandemic “poses considerable risks to the economic outlook over the medium term” and that the federal funds rate would remain near zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Powell also told reporters that supporting the recovery would need help from both monetary and fiscal policy.

Grim Milestone

The U.S. coronavirus death toll topped 150,000, the highest official toll in the world and a grim milestone in a pandemic that is still raging in some states. Texas, Florida and California reported record daily fatalities. Brazil registered a record number of cases and deaths after days of reported issues with the transfer of the data from local governments into the national system. The Latin American country added 69,074 cases on Wednesday, pushing the total number of infections to over 2.55 million. Russia plans to register a coronavirus vaccine as soon as August 10, clearing the way for what its backers say would be the world’s first official approval of an inoculation against the virus. And in India around six in ten people living in some of the nation’s biggest slums were found to have antibodies for the novel coronavirus, indicating they’ve recovered from infection. It would appear to be one of the highest population immunity levels known worldwide.[Bloomberg]

FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

Asian stocks traded mixed Thursday as investors weighed a signal from the Federal Reserve that more stimulus will be provided against a slew of earnings and the continued spread of the coronavirus. The dollar steadied. Shares climbed in Hong Kong and Sydney with stocks in Seoul given a boost as earnings at Samsung Electronics Co. topped estimates. Gains fizzled in Tokyo and stocks fluctuated in Shanghai. Futures on the S&P 500 Index edged lower after the gauge extended its July rally, with the Fed keeping rates near zero and pledging to use all of its tools to support a recovery from the coronavirus pandemic. European contracts ticked up. The Australian dollar slipped after new coronavirus cases in the country surged to a record. Treasuries were steady, while gold slipped.

We still have the daily resistance at the 6185 area for today, from the 25ema, and after yesterday being fairly flat, despite the Fed in the evening, some other resistance levels have appeared around the same level. As such should we see this 6185 area then we may well see some bears appear here as we are also nearly at the top of the 10 day Raff channel in this area as well. We do have R1 at 6172 slightly lower down though and with this week being fairly flat the difference between the support and resistance levels has narrowed.

If the bulls were to push past the 6185 area then 6250 is the next area of note, with 6300 above that. The 20 day Raff channel has widened out a bit though and the top of that channel is now at 6350. It will certainly be interesting to see what happens at the 6185 area if we get there though, and it could well be worth a few bearish points.

Bit more media chatter about the second wave, or maybe just one big wave still, on the virus front, with US deaths now passing 150,000. European flare ups seem to be appearing as well now, and that’s despite the measures (and warmer weather!) in place.

Initial support this morning is at 6138 where we have the daily pivot and if you’re feeling brave then an early long here is worth a go for a rise to that 6185+ level. However, if the bears break below 6138 then we should get a drop down to 6110 where we have S1 and the 2hr coral line. Whilst this is still red for the moment, it should turn green if the bulls can continue to defend. 6100 is also the key fib for today. A break of this though and 6080 looms initially, with a possible trip back down to 6000 on the cards, where we have the bottom of the 10 day Raff for the moment.

So, looking at 6138 then 6110 as the main supports for today, with 6185 and 6250 as the main resistance levels.

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