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  • The S&P 500, Dow Jones and DAX 30 could be at risk of falling as retail traders continue increasing their upside exposure in these indices. What are the key technical levels to watch for? Find out from @ddubrovskyFX here:https://t.co/OJByiwIppr https://t.co/moWS7rqAQG
  • RT @FxWestwater: New Zealand Dollar Outlook: $NZDUSD Drops on US Dollar Bids, Wall Street Losses Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/09/16/New-Zealand-Dollar-Outlook-NZDUSD-Drops-on-US-Dollar-Bids-Wall-Street-Losses.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https://t.c…
  • The US Dollar continues to hold its ground against most ASEAN currencies as recent downtrends lose momentum. What is the road ahead for USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:https://t.co/UcleaZEAaW https://t.co/dRD22S792t
  • 🇳🇿 Business NZ PMI (AUG) Actual: 40.1 Previous: 62.6 https://www.dailyfx.com/economic-calendar#2021-09-16
  • The Canadian Dollar has been caught in broad ranges against the Euro and the US Dollar, but can the upside bias in USD/CAD and EUR/CAD prolong? Find out here:https://t.co/8DubboXsjv https://t.co/SQAz8sCpmv
  • RT @BrendanFaganFx: Bitcoin Outlook: Crypto Adoption to Become Widespread in Wake of El Salvador, AMC? #Bitcoin #Ethereum $AMC $BTCUSD $ET…
  • Heads Up:🇳🇿 Business NZ PMI (AUG) due at 22:30 GMT (15min) Previous: 62.6 https://www.dailyfx.com/economic-calendar#2021-09-16
  • The 10-day range and realized volatility (ATR) on $USDMXN are the lowest since 2008 and 2014 respectively. Breakout risk is high - when the right spark comes along (eg FOMC) https://t.co/teP1XQI7W6
  • Bitcoin taking a breather today after rallying back above $47,000. 50-day MA crosses back above the 200-day MA $BTCUSD #Bitcoin https://t.co/5Yidx9WQhc
  • AUD/USD extends the decline following the larger-than-expected contraction in Australia employment as fresh data prints coming out of the US fuel speculation for an imminent shift in monetary policy. Get your $AUDUSD market update from @DavidJSong here:https://t.co/40vc0oCeiE https://t.co/vjrF47cALn
Dow Jones and FTSE 100 Forecasts for the Week Ahead

Dow Jones and FTSE 100 Forecasts for the Week Ahead

Justin McQueen, Strategist

Dow Jones, FTSE 100 Analysis and News

  • Peak in Negative Sentiment Depends on Peak in Coronavirus Cases
  • Dow Jones | Bear Market Rally to Unravel Post Portfolio Rebalancing
  • FTSE 100 | Bull Trap Sets Up a Potential Retest of the Lows
Equity Performance Chart

Source: DailyFX

Peak in Negative Sentiment Depends on Peak in Coronavirus Cases

Throughout the week, the number of coronavirus cases has been met with a mixed reaction. First off, the number of cases in Italy had appeared to be slowing, however, the spread of the virus appears to be spreading rapidly in the US, which has now overtaken the original epicenter of China. In turn, for the negative sentiment to peak, this would depend on reaching a peak in the number of cases. Alongside this, the initial impact of the coronavirus has already been felt in the jobs market, with US jobless claims reaching a record 3.283mln, which we believe is a precursor to weak NFP data. Don’t be surprised of a negative NFP headline.

Record Jobless Claims

US Jobless claims record

Dow Jones | Bear Market Rally to Unravel Post Portfolio Rebalancing

The beginning of the week saw the Federal Reserve effectively announce unlimited QE, which had been somewhat of a game changer for US equities, with the Dow Jones subsequently on course for its best week since 1932. However, we are cognizant of the fact that with underlying issues pertaining to the coronavirus forcing US activity to a grinding halt, downside risks remain. As such, we see this as more of a bear market rally, potentially impacted by suspected frontrunning of massive portfolio rebalancing inflows expected at month and quarter end. Therefore, the beginning of the new month (Wednesday) may provide a clearer sense as to where the equity market is at. Consequently, we are cautious in chasing a bull trap.

Fed Balance Sheet Breaks Above $5 Trillion: The Only Way is Up

Fed Balance Sheet

Dow Jones Price Chart: Weekly Time Frame

Dow Jones

Source: IG Charts

FTSE 100 | Bull Trap Sets Up a Potential Retest of the Lows

The number of coronavirus cases in the UK unfortunately showing little signs of easing, which in turn raises the risk that much like the Dow Jones, the FTSE 100 is showcasing a bull trap. The risk is that the lockdown is extended. Keep in mind that Wuhan had been in lockdown by roughly 9 weeks, a similar duration may well see a retest of the lows. Volatility remains elevated and therefore it will be important for traders to remain nimble.

FTSE 100 Price Chart: Weekly Timeframe

FTSE 100 Price Chart

Source: IG Charts

RESOURCES FOR TRADERS

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

Dow Jones Price chart

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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