FTSE 100 Support: 6886 6886 6837 6833 6825 6816 6772
FTSE 100 Resistance: 6940 6943 6974 6984 7005 7027
Well that was certainly bullish yesterday, as the only area with a slight pullback was the 6890 area when it dropped down to 6864. However, the third test of the 6890 level broke and the bulls pushed on to 6940. I was expecting a climb, but not quite like that. The 6680 level when we went long the other day, has proven to be a rather good support level.
The rise all to do with the (yet again) expectation of further economic stimulus measures, as we have the ECB early this afternoon (12:45) with Draghi expected to prolong the asset buying program.The bank stocks also rallied amid Monte dei Paschi rescue reports in Italy, which helped the general bullish sentiment. If in doubt, throw money at the problem. It's eyes on the Fed next week for US interest rates. Odds are at 100% that they will raise rates. We also have US unemployment claims data due out at 13:30.
FTSE 100 Outlook and Prediction
Today its all on the ECB at 12:45 and what stimulus measures are ahead – prolonging the asset buying program or not. Along with this, we have the rate decision. Rates are expected to stay at 0%. We also have US news at 13:30 with unemployment claims, forecasted to be 255k versus 268k previously. After the strong rise yesterday, we may well have a period of consolidation while we await this news, then some volatility and then more flat this afternoon.
The levels that I am watching at 6886 for initial support where we have the daily pivot, and a back test of the top of the Bianca channels here. Below that, then 6836 is the next support area I am looking at, with 6772 even lower down. Would have to be a pretty bearish day (unlikely) to reach that today though. Worth longs off these levels (go with the trend and all that).
For resistance, we have 6942 initially, where we have the top of the 10 day Raff and also the overnight high. Above that, 6974 and 7006 for the top of the 10 day Raff. The bulls will be keen to keep the momentum going and head for the 7000 level. I expect, though, with the US starting to make record highs, that that usually only lasts for a little while before the inevitable pull back. I still think that there is more trouble around the corner despite this equity rise. A view reinforced by the need for the ECB to extend the asset purchases program. Still, trade what you see, not what you think.