Option expiry | Retail sales | 7650 7673 7715 resistance | 7620 7570 support | Rate cut looks likely

Option expiry | Retail sales | 7650 7673 7715 resistance | 7620 7570 support | Rate cut looks likely

FTSE 100 live outlook prediction analysis for 17th January 2020

The S&P 500 crossed the 3,300 mark for the first time yesterday while other US indexes also hit record highs, as encouraging retail sales data and strong earnings added to US-China trade deal optimism.

  • Wall Street surges as European markets stay flat after Trump signs trade agreement with China, but FTSE 100 lags pack
  • No big deal: Trump signs phase one trade truce with China but economists are unimpressed ​

It was a flat day of trading for the FTSE 250, which ended today’s session almost unchanged despite a slew of corporate updates that shifted shares in both directions. The FTSE 100 was not so lucky, lagging a fairly flat set of European indices through the session to close in the red. The blue-chip bourse was stung by a rising pound, and a string of poor corporate results that dragged on the index.

Not Over Yet

Now that the trade deal is officially signed, Xi’s wider fight with the U.S. is only just beginning. In a letter read out during Wednesday’s trade deal signing at the White House, Chinese leader Xi Jinping asked U.S. President Donald Trump to take steps to “enhance mutual trust and cooperation between us.” That won’t be easy: Apart from the trade agreement, the U.S. and China are butting heads on everything from technology to human rights to territorial disputes. Just this week, Secretary of State Michael Pompeo told executives in Silicon Valley the U.S. is “facing a challenge from China that demands every fiber of your innovative skill and your innovative spirit.” A return to acrimony could have major consequences for China, and for Xi. In the short term, renewed tensions with the U.S. risk weakening an already fragile economic situation, while investment restrictions could hamper plans to secure technologies essential to driving growth. For Xi, a perceived failure to manage U.S. ties could also dent support for a third term in office. Meanwhile, economists aren’t seeing any U.S. growth bump from the U.S.-China deal. Also, here’sa list of trade war winners and losers.

Markets Up

Asian equity markets traded mostly positive after taking impetus from another record-setting session on Wall St. Treasury yields edged up, while futures rose in Japan, Hong Kong and Australia. The S&P 500 climbed to a fresh all-time high on Thursday, with technology and financial shares leading the charge: Alphabet’s market valuation hit $1 trillion for the first time. Treasuries fell after data showed U.S. retail sales strengthened in December, while the dollar nudged higher. Elsewhere, crude oil advanced and gold slipped.


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

We have option expiry today so we may see some volatility kick in around 10:10 this morning as the various futures contracts roll over. Be aware of that. For today we may well see a rise towards R1 at 7656 and then a stumble there. If the bulls could break above this then the fib level is next up for resistance at the 7673 level, where upon we may well see the bears appear, especially if its towards the end of the session and would be a decent spot to book some profits ahead of the weekend. With yesterdays slightly more bearish session, the 2 hour resistance has kicked in and held overnight at 7633, and we have had a small drop off that on the futures. Bulls will need to break that initially.

The bulls will still be keen to defend the 7600 level and indeed we have S1 at 7597 for today. The daily chart below shows the resistance lines in play which are capping the rises for the moment, but should the bulls push on and break through the resistance levels for today then we could well start to see a rise even further towards the top of the Raff channels. They sit at 7750 for the moment, but not sure that we will see that level today ahead of the weekend!

The 30min coral has gone green showing a positive trend and also offering initial support this morning at 7619. We may well see that hold initially, but if not then as mentioned the S1 level at 7597 is next up. Below this then a drop down to the fib at 7570 would probably play out. With this fib just above S2 then I would expect it to hold.

Option expiry and Friday so stay nimble and it can also pay to dial back the risk a bit today. The US markets may well want to end the week setting a new high as well. The S&P 2 hour chart remains bullish with support at 3307 for today. Good luck today and have a great weekend.

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2 Comments

  1. 09:30 GBP Core Retail Sales (YoY) (Dec) 0.7% 2.9% 0.6%
    09:30 GBP Core Retail Sales (MoM) (Dec) -0.8% 0.7% -0.8%
    09:30 GBP Retail Sales (YoY) (Dec) 0.9% 2.6% 0.8%
    09:30 GBP Retail Sales (MoM) (Dec) -0.6% 0.5% -0.8%

  2. Joe Public finally realised that buying stuff you don’t need with money you don’t have isn’t worth it. Overpriced products in the stores mostly and people realising they can live without it.

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