Market Forecast 21/09/2017

FTSE 100 is down and out, and remains sell on rallies. SPX 500 rests in a crucial uptrend with support near 2500.

FTSE 100 Index Forecast – Upsides Remain Capped

Key Points

  • The FTSE 100 index struggled to settle above the 7,450 level and started a downside move.
  • There was a break below a crucial triangle support at 7,335 on the 4-hours chart of FTSE 100 Index.
  • Today in the UK, the Net Borrowing figure for July 2017 was released by the National Statistics.
  • The forecast was slated for £6.500B, but the actual was better as the Net Borrowing was £5.093B.

FTSE100H4.png

The FTSE 100 index traded in a range for a long time and held the 7,350 support zone. However, the index finally gave up and declined below a major support area at 7,350.

There was a crucial triangle pattern with support at 7,335 on the hourly chart of the FTSE 100 index. Sellers succeeded in breaking the channel support at 7,335 and the index fell towards the 7,200 level.

A low was formed at 7,199 from where a recovery was initiated. The index moved above the 23.6% Fib retracement level of the last decline from the 7,438 high to 7,199 low.

However, the upside move was capped by 7,290 and the 38.2% Fib retracement level of the last decline from the 7,438 high to 7,199 low.

Further to the upside, the broken support near 7,330 and the 50% Fib retracement level of the last decline from the 7,438 high to 7,199 low are also important resistances and can be considered as sell zones in the near term.

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UK’s Net Borrowing

Today in the UK, the Net Borrowing figure for July 2017 was released by the National Statistics. The forecast was slated for the Net Borrowing to be £6.500B compared with the last £-0.760B.

However, the actual result was better as the Net Borrowing was £5.093B and the last reading was revised from £-1.292B to £-0.760B. Looking at the Public sector net borrowing (excluding public sector banks), there was a surplus by £0.2 billion. This is the first surplus in July since 2002.

The report added that “Public sector net debt (excluding public sector banks) was £1,758.3 billion at the end of July 2017, equivalent to 87.5% of gross domestic product”.

 

SPX 500 Index Forecast – Crucial Resistance Break?

Key Points

  • The SPX 500 Index remains in a solid uptrend and recently traded above the 2,510 level.
  • There is a contracting triangle with resistance near 2,520 forming on the 4-hours chart of the SPX 500 Index.

SPX500H4

In the last two analysis, we pointed out a bullish trend for the SPX 500 Index above the 2,450 level. The index retained its bullish bias and recently moved above the 2,500 handle and traded as high as 2,511.

There are a lot of positive signs, but we need to be careful of a contracting triangle with resistance near 2,520 forming on the 4-hours chart of the SPX 500 Index.

As long as the index is above the triangle support, it could resume its upside move above 2,510. Otherwise, there can be a correction towards the 2,480 level in the near term.

 

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