Stock markets across Europe spent most of Monday deep in the red, with the FTSE 100 posting 1pc losses and Germany’s blue-chip DAX falling almost 2pc. Virtually all of London’s blue-chip companies were down at midday with only BP (LON:BP)and Shell (LON:RDSa), gold miner Polymetal (LON:POLYP) and weapons manufacturer BAE Systems (LON:BAES) notching meaningful gains, amid escalating US-Iran tensions.
The FTSE 100 closed the day 0.62pc lower.
FTSE 100 Outlook and Prediction
The markets proved quite resilient yesterday and after the initial drop off the 7595 resistance level to test a low at 7525, the bulls fought back and we have recaptured 7600 overnight. The US bulls also managed to get a steady rise going on the S&P 500 with the bottom of the Raff channels holding at 3210. That has now changed the charts to a more positive picture, with 2 hour supports on the FTSE showing at 7576 and on the S&P at 3234. The Dax is a little bit more subdued as data is weighing on that, with the latest car production figures dropping to a 23 year low on waning exports.
More often than not we get a mid January sell off and it looks like we may well push a bit higher for that to then kick in, rather than selling off early January. As such, we may well get a rise towards the top of the 10 day Raff channel today at 7666, and also possibly the 7686 resistance level. Above that the bulls will be keen to defend the 7600 level this morning having brought it up, but there slightly lower supports at the 7570/80 area look like they might see a test. There are a cluster of 30min supports here, namely the daily pivot and the coral, and also just below the 200ema which is now sitting at 7589.
If the bulls defend the 7570 level then we should see some more upside today, in a mirror of the ASX 200, which saw a steady grind higher today, If the bears were to break below 7570 then a drop down to the 7512 fib level looks like the next play, and also a test of the 25ema at 7503. If we were to see this area then a long here is worth a go, and could have a decent target area up at 7700+ ultimately. I don't think we will dip that low today but you never know!
So for today looking for a rise to the 7666 and 7686 levels whereupon we may well then see a turn lower (which may well tally with a nice double top on the S&P at 3265. Looking at 7575 and then 7503 as the main supports for the FTSE today.