Technical analysis for FTSE 100 for 22nd August 2024
FTSE 100 ended slightly higher on Wednesday, as traders remained cautious ahead of release of the Federal Reserve's July meeting minutes and speeches from policymakers this week, while midcap stocks soared as pound hovered near one-year high levels.
The blue-chip FTSE 100 index moved 0.1% higher, after logging its worst day since Aug. 5 in the previous session. The mid-cap FTSE 250 index edged 1% higher. .The pound steadied on Wednesday near the one-year high it touched against the dollar on the previous day, with the U.S. currency under pressure from rising expectations of Federal Reserve interest rate cuts.
Investors assessed a downward revision in U.S. payrolls data, while the focus is now on the release of minutes from the Fed's July policy meeting, at which Chair Jerome Powell hinted at a possible rate cut in September.
Market participants will look for hints on the pace of monetary policy easing following a batch of mixed economic data from the U.S. recently.
Later in the week, investors are eagerly awaiting Fed Chair Powell's speech at the Jackson Hole symposium in Wyoming, where the policymaker is expected to acknowledge the case for a September rate cut amid dovish comments from some Fed officials recently.
Asia & Overnight
Asian shares inched higher while the dollar was pinned to one-year lows on sterling and the euro on Thursday as Federal Reserve minutes showed policymakers were ready to start cutting U.S. interest rates.
The minutes said the "vast majority" felt that if data came in as expected, a September cut was likely to be appropriate and in response U.S. stocks rose, bonds rallied and the dollar fell.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2% in early trade and Japan's Nikkei rose 1%. Hong Kong's Hang Seng was up 0.7%.
U.S. and European equity futures were broadly flat and commodities sounded a note of caution.
Brent crude futures have slid nearly 6% through August so far at $76.04 a barrel and are close to testing the year's lows as swelling U.S. crude stocks and a weakening demand outlook in China have raised pessimism.
FTSE 100 technical analysis for today, 22nd August 2024
It feels like we may well continue the slow rise today and get up to the resistance area at 8333 ultimately. That said we have the 8310 as the first level that the bulls will need to break, and we could see an early drop off this before rising again later, probably helped by the US markets.
Jackson Hole gets underway today, and if yesterday's rate cut possibility feel good factor continues we may well see some more buying. The recession talk has subsided from the other week as well.
We are just sat on the daily pivot to start with at the 8275 level which may act as early support, though should the bears break below this then the 8250 S1 level is next up which coincides with the recent low and also the 25ema on the daily at the 8240 live. As such, a long here is worth a go though if it doesn't bounce then further downside will see a drop to the 8203 level. That is daily support and splits S2 and S3 at 8215 and 8192 respectively. The bulls would certainly be keen to defend the round number as well.
The various daily charts remain bullish, despite the shorter time frames looking more negative, so zooming out its still buy the dips for the moment. The S&P500 daily support is at 5482 currently as well. The 10d Raff channels across the board continue to head upwards as well.
For the FTSE100, if the bulls were able to break above the 8330 level then 8368 is R3 and then the daily level at 8428, though both of these may well be a big ask today.
Good luck today.
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