Option expiry today | bears taking some control | 7445 7470 7491 resistance | 7394 7350 support

Option expiry today | bears taking some control | 7445 7470 7491 resistance | 7394 7350 support

FTSE 100 live outlook prediction analysis for 21st February 2020

The improbable, record-breaking rally in European shares hit a wall on Thursday as a string of warnings by companies over the looming impact from coronavirus left investors shaken. Top stock indices across the Continent took a turn for the worse in the closing minutes after a day of lukewarm activity.

The pan-European benchmark STOXX 600 closed down 0.86pc, coming off a record close set on Wednesday.

It is not the first time shares have dipped in the face of the outbreak – which has jumped to the top of companies’ concerns as it threatens a dual-pronged disruption of supply and demand – but the fall this time came despite a sharp fall in the number of new cases being reported in China: suggesting investors are now turning their minds to the longer-term economic impacts. Goldman Sachs warned a correction across global equity markets looks “increasingly likely”, warning that valuations across stocks and bonds are looking unsustainably stretched.

The FTSE 100 escaped the worst, with a fall in the pound – which hit its lowest level against the dollar since November as the greenback continued to strengthen – aiding London’s international earners.


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

It took a while but we saw the drop off the 7470 resistance level yesterday with the most movement in the last hour of the session. The S&P never recaptured the 3395 tested out of hours, and dropped off quite sharply from the 3388 level instead as virus fears reared up again. To start with on the FTSE we are at the 7420 level again and we have the green 2 hour coral here – so if the bulls were quick out the blocks we may well see an initial climb from this level. However, there is then resistance fairly close at the daily pivot at 7445 and also the 30min coral at 7451 so any bounce may well stall here for a further slide. Should the bulls manage to push past this level then 7470 is of course still key, and then 7492 above this where we have the fib level. I am not sure that there will be masses of buying pressure ahead of the weekend, despite the optimism that is still around, as the knock on effects from the virus continue to gather pace.

If the bears break below 7417 initially then we are looking at a slide down to the 200ema on the daily at 7377 I feel. We do have S2 and the fib level just above this at the 7390 area but as thats fairly close to the 7420 we may well see the bearish momentum push through that.

Yesterday it felt like shorting the rallies was the best stance, and it feels that way again today. If we do get a rise towards the 7450 and 7490 areas then these look good for a short. As its Friday it is usually sensible to be a little bit more cautious with lower stakes as the movements are usually a bit odd.

I am sure that the bulls will be trying to defend the support levels but it does feel like we are going to get the pullback at last, especially as the 3395 S&P resistance level has remained intact.  Good luck today and have a great weekend.

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One Comment

  1. US Markit Manufacturing PMI Feb P: 50.8 (est 51.5; prev 51.9)
    – Markit Services PMI Feb P: 49.4 (est 53.4; prev 53.4)
    – Markit Composite PMI Feb P: 49.6 (prev 53.3)

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