FTSE 100 live outlook prediction analysis for 24th February 2020
Global markets slipped further on Friday as a shock drop in US private sector activity rattled investors.
- US services activity dropped for first time in four years, dragging its composite index to the worst level since 2013
- UK manufacturing growth hit its highest level since April, but companies warned on disruption from coronavirus
- The Eurozone gauge beat expectations on all measures
- German manufacturing activity was not as bad as feared, but supply chains problems may have counter-intuitively flattered the figures
The FTSE 100 closed at 7403 and we have seen a large slid across the board since, with the FTSE finally testing the 7300 level as I am writing this. There is a large 27 point dividend this week which may help a little bit but the virus fears have rattled markets again. The S&P has gapped down below 3300 as well.
Virus Fears Grow
The coronavirus continued its global human and economic destructionover the weekend. Hong Kong’s finance chief warned the virus threatened by a “Tsunami-like cataclysm,” as the virus devastates business already hobbled by months of anti-government protests. South Korea raised the country’s infectious-disease alert to the highest level after a 20-fold increase in cases in five days. The U.K. said four passengers who arrived Saturday from the Diamond Princess cruise ship in Japan tested positive for the virus. Three passengers on the ship have died while another tested positive at home, despite a negative reading during the ship’s quarantine. Italy canceled public events in the north of the country including the Venice Carnival after coronavirus infections rose to 140 and a travel ban affecting about 50,000 people southeast of Milan was implemented. Inside China, top leadership pledged further fiscal and monetary steps to help growth rebound and pushed factories to reopen.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Well this is a bearish start to the week, with a sea of red across the indices. Explains why gold rose steadily last week and didn’t pullback after breaking through the $1600 level! The FTSE has finally dropped down to the often mentioned 7300 level as well, and has the potential to drop down a bit further towards 7250. With the 27 point dividend this week we may well see these lower supports hold. We also have S3 at 7278 to start with this morning so may in fact see that hold and we don’t reach 7250.
The 2 hour chart went bearish Friday afternoon with 7435 resistance but this has been a very strong follow though from there. As you would expect the 2 hour chart is bearish now, and the coral has got resistance at the 7424 level as well. Should we rally that far then its a short entry there. Back end of last week we adopted a “short the rallies” mode as you know, and that still looks to be the case for this week, certainly to start with. But with the dividend if we did drop down to 7250 it’s a possible buy at that level…. Clear as mud!
S&P, Dax and FTSE are all below S2 but above S3 so we may well see those hold initially this morning so watch for 3285, 13255, and 7278 as supports initially on them. Sentiment is VERY bearish though today. Gold has pushed above both the Raff channels currently so we could see a drop back to retest them at 1650ish.
So for the FTSE looking at a tentative initial rise form the 7300 level to back test S1 at 7358. If the bulls can break above that then the gap at 7397, and pivot at 7406 are probably going to be reached, but initially that does feel a big ask. As such I have gone for a short off an S1 backtest instead. If the bears keep hold of the baton then a drop down towards the 7250 level certainly looks possible early this week. Should they break that then a more significant slide is probably going to play out, heading towards the 7070 daily support area. The virus fears seem to come and go, at the moment they are at the front of the queue!
Good luck today, it might be a bit of a tricky one!
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Or of course, crash through 7250 instead!