It was a happy end to the week for the FTSE 100, which managed to wipe away losses for the month so far after solid gains on Friday. The blue-chip index just scraped over a strong performance in August to have its best showing since the end of July. A lot of that was of course at the expense of the pound, which found itself battered from two directions as PMI data rolled in. The Bulls managed to regain the 7300 level and hold onto it for the rest of the day, setting up the 7200 as the low for the moment and a continuation of the bull run.
FTSE 100 for today
The bulls have built on Friday's move and managed to get the futures up to the 7350 level. To start with today we have resistance at the 7362 level with a key fib here to start the day, and as such we may well see a bit of an initial drop before more upside later as a possible bull Monday kicks in. There is a gap at 7340 which is likely to close initially, along with the closing price last week at 7326. However, with the bull on Friday the 2 hour and daily charts have gone bullish and have got decent support showing.
The daily 25ema is at the 7306 level, while the Hull moving averages on the 2 hour is rising and currently at 7268. If that continues to rise today it may well coincide with the 7300 level later on and as such a long at this area looks to be worth a go. The big question is if the 7180 level is the low for now. As you know I was expecting a drop down but I was thinking the 7100 level looked more likely, but maybe the bulls put up a stronger fight and 7180 is it.
All that said, I would still like to the see the S&P drop down to test the 25ema, which is currently at 3074. It's regained 3120 overnight and refuses to get too bearish, defending the 3100 level on Friday. If it does start to go then we should see the FTSE retrace a bit down to the daily supports. 7294 previous resistance, in theory(!), should now also become support.
If the bulls break the 7356 level to start with then we should get a test of the R1 and 10 day Raff channel top at 7375. If we do then I would like a short here, as I think we may well see some initial profit taking from the 7200 longs here, and also a drop back down to the supports would make sense for a push higher towards the end of the year. The 10 day Raff channel has been working quite well so far during Q3 and Q4 and hopefully that continues!
Above the 7375 level then 7416 looks possible and the FTSE 100 looks pretty bullish still. Focus will be onto the election soon, with the MSM being quite bullish over the weekend and estimating that the FTSE is lagging other global indices by 20% due to Brexit uncertainty. If the election delivers a Tory majority, the deal is then more likely to pass through parliament, and that uncertainty may diminish, with the associated uplift in the FTSE 100. 500 point rally anyone to close out 2019...? Who knows!
Anyway, back to the charts and if the bears were to break below the 7300 level today then 7251 is the key fib and a likely area that it will drop down too. If we get a sharp drop to start with then the 7260 area does look good for a long with a stop below that 7251. Good luck today, favouring a dip and rise to play out with a test of the 7300ish area to hold and see a rise from there.