Bulls On The Back Foot With 7540 FTSE100 Resistance

Asian stocks fell and Treasuries rose after Federal Reserve minutes showed officials face a delicate balancing act to quell inflation while averting recession and as investors weighed a dim Chinese economic outlook.

Today, I am expecting a bit of a rise and dip to play out, as the bulls defended the 7490 level yesterday. We are also testing the bottom of the 10-day Raff channel at the 7490 area and a rise to test to the new 2h resistance level at 7543 would make sense to start with. If the bulls can manage it!

If we do get to that level then we may well see the bears appear here, for a run down towards the 7460 support area. Below that then they will be aiming for 7440 where we have S2 with 7420 below that for a test of the 25ema on the daily. That would be the first test of that EMA since it went bullish on the 25th July, so could well be quite a key area for the bulls to defend. Normally that would be a decent swing trade entry indicator so worth fading in a long here and if it starts to bounce, then adding in.

For the bulls, en route to 7540 does have some resistance at 7522 where we have the daily pivot, and we could well see a stutter here first thing. The 30m chart is quite bearish to start with as well, so the bulls have their work cut out - we have the red coral and the 200ema all between 7510 and 7522. That said, the bulls will be keen to defend the 7500 round number. So, a bit of no man's land at the moment!

The Raff channels continue to head up though we are now nearly at the bottom of them both - 7490 and 7475 support from them for today.

Focus is still firmly on inflation and the associated interest rate rises from the central banks. Cost of living increases continue apace as the news flow remains negative, with house prices dropping off, wages reducing, etc. It really is a perfect storm at the moment and the banks will be keen to avoid stagflation which can persist for quite a while. We mooted that this would be a possibility some years ago after what happened in Japan (the lost decade), and it does look like it's coming to pass in the West. Those who forget the past are doomed to repeat it!

S&P500
Similar picture here really with a rise towards the pivot at 4277 and then a drop off down to test the support at 4228. The 2h chart is bearish with 4315 resistance above the pivot, and the bulls failure to hold onto 4290 means the bears have a shot at driving it down, for a bit anyway! 4245 is first key support with the key fib and S1 here. 4235 is the bottom of the 10d Raff channel along with 4217 for the 20d - with all three markets testing the bottom of the Raff channels potentially today, it's really up to the bulls what happens next - fight back or give up!

Good luck today.