Stocks and US equity futures fell Tuesday amid escalating US-China tension over Taiwan and deepening worries about a global economic slowdown, risks that supported demand for havens like Treasuries.
FTSE 100 Outlook and Prediction
Nice little new month money kick up yesterday to get as high as 7470, however the bears then drove it back down as yet more political tensions flare up. This time over Taiwan. No surprise there really as that's been simmering for years. Australia has raised its interest rate by 50bps, and we will likely see the BoE do the same.
Initially today we may well see a rise to regain 7400, and test the 7425 resistance level where we have the daily pivot and the now red 30m coral. 7434 is also locked in as the 2h Hull resistance level.
To start with we are on the S1, 200ema and key fib support at 7378 hence thinking an initial climb from here.
Above the 7435 level then the bears will be on the back foot again as the bulls will be looking to drive it up to 7470 again, and possibly as high as R2 at 7504. That feels a big ask for today though and I am mostly expecting a bit of a bear Tuesday to play out.
We are still due a drop down to test the daily 25ema which is at 7294 for today, which would fit that daily chart well now it's gone bullish. Again, it may not get to that level today though, as we have S2 support at 7347. That said, that 25ema does align with S3 (7300) but a 200point drop from this current level seems a bit much.
S&P500
The bulls will need to defend the 4088 key fib level today and need to break above 4120 where we have the daily pivot and the red 30m coral. If they do so then a rise to test the high of yesterday at 4145 would be likely, and then more upside towards the daily 200ema at 4180. However, the 2h chart has gone bearish and has the 4135 level as resistance from the Hull MA. 4085 is also the green 2h coral so I would like to see this level defended on any weakness today.
A bit of sideways action really as we are in the slow summer month of August, and whilst we await the latest BoE interest rate news on Thursday