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7440 If The Bears Can Break 7490 With 7540 Resistance Still In Play

By FTSEDayTrader Limited (Nick Hilsden)Market OverviewAug 23, 2022 07:24

Bearish Monday with stock markets selling off on mounting recession fears, with eurozone blue-chip shares plunging almost 2pc and the FTSE 100 dropping 0.2pc. In America, the tech-focused Nasdaq fell 2.5pc and the broader S&P 500 dropped 2.1pc.

In light of everything, the FTSE 100 has been quite resilient, bouncing between the 7490 and 7540 levels. We will inevitably get a break soon and a drop-down to the daily support at 7468 for a bear Tuesday may well play out today. We also have the key fib here to lend some support as well.

Below that then the bears will be looking at 7440, which could tie in with the S&P dropping down to the 4100 area, as it looks like it wants to do. The bears managed to move it below the 4140 25ema on the daily yesterday, scuppering the bulls hopes of a rise back towards the 4200 area. 7440 may well see a bounce should it get that low.

Things still look weak, and Citi forecasting UK inflation rising to 18% put the cat amongst the pigeons on the currency markets, though ironically cable dropping helps to underpin the FTSE 100 (as a lot of FTSE 100 companies earn in dollars).

If the bears break S1 to start with, and that is once again at 7492, then we may well see a slide to those levels mentioned above. On the other hand, if the bulls can break above the daily pivot at 7521 this morning then a rise back towards 7553 for an R1 test would likely play out. That is just above the now red 2h coral at 7541, so a stutter around this area is highly likely on any rise.

Above that 7553 then 7576 is once again in play (the shorting level we had from Friday) and 7614 R3 above that. Feels like a big ask to get that high today though, especially as the S&P 500 looks like it wants to slide to 4100!

It’s worth noting that the FTSE 100 is currently also testing the bottom of the Raff channels, both of which are around the 7490 level. The bulls will certainly be keen to defend the drops today in light of that.

The ASX 200 had a pretty bearish session today and we may well follow suit. The usual August chop however does continue, so stay nimble, and keep an eye on the key levels mentioned elsewhere in this email.

Good luck today.

7440 If The Bears Can Break 7490 With 7540 Resistance Still In Play

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