Technical analysis for FTSE 100 for 20th August 2024
London stocks ended higher on Monday, boosted by a rise in metal mining shares as prices of most base and precious metals advanced, while homebuilder Barratt gained after the competition regulator's condition was waived for its deal to buy Redrow.
The blue-chip FTSE 100 index was up 0.6%, led by a 2.4% gain in precious metal miners amid a recent record run in gold prices, which traded above $2,500 per ounce.
All eyes this week will be on the Jackson Hole economic symposium of the Federal Reserve, where Chair Jerome Powell will be speaking on Friday and investors will look for clues on the bank's interest-rate path.
On Wall Street, stocks added to their recent gains. The Dow Jones Industrial Average rose 0.58%, to 40,896, the S&P 500 gained 0.97%, to 5,608 and the Nasdaq Composite gained 1.39%, to 17,876. MSCI's broadest index of world stocks jumped by around 1%
Asia & Overnight
Asian stocks scaled a one-month peak on Tuesday, tracking a Wall Street rally driven by expectations that the Federal Reserve could offer further hints of imminent rate cuts later this week.
With the data calendar relatively light across major economies this week, all eyes are on Wednesday's release of the Fed's July meeting minutes and Chair Jerome Powell's speech at Jackson Hole on Friday for clues on the outlook for U.S. rates.
MSCI's broadest index of Asia-Pacific shares outside Japan hit a one-month top before giving up some gains to trade 0.4% higher.
Japan's Nikkei rose 1.7%, helped by a jump in technology stocks as it shrugged off the latest bout of yen strength.
Fed speakers have in recent days signalled a potential easing in September.
That's helped gold prices hover above the $2,500 level, near a record high, while the dollar dropped a notch lower in early Tuesday trade to its lowest in over seven months against a basket of currencies , at 101.76.
Risk appetite was also buoyed by news that Israeli Prime Minister Benjamin Netanyahu had accepted a "bridging proposal" presented by Washington to tackle disagreements blocking a ceasefire deal in Gaza.
U.S. stock futures were little changed in early Asia trade, with S&P 500 futures last 0.02% lower while Nasdaq futures ticked up 0.04%. EUROSTOXX 50 futures were flat, though FTSE futures fell 0.36%.
In Asia, China's benchmark lending rates were left unchanged as expected and market reaction was muted.
FTSE 100 technical analysis for today, 20th August 2024
A decent bull Monday yesterday with decent longs on the Dax40 and S&P500 playing out. The FTSE100 managed to get to its daily resistance level at 8368 in the end, whereupon it turned tail and sets up a potential bear Tuesday today.
Everything is a lot more positive now after the recent sell off with the FTSE100 showing a potential long term test of the 8650 level - will that come to pass in September once holiday season is over? The daily chart is bullish with the 25ema support at 8240 so still buy the dips on the longer times frames for the moment.
Shorter term, given the overnight decline, the 2h chart has gone bearish and has the 8356 level as initial resistance, along with yesterdays high at 8370 in play. We could the see the bears strike early today and just drop of this lower resistance, though I am thinking that a test of the R1 and key fib at the 8390 level could well happen. The short order is here but could be worth fading in at the 8370 and 8390.
Initial support is at the daily pivot at the 8332 level, with 8290 looks good below this - S1 is here, along with the 30m 200ema and the key fib close as well. If we were to drop to this level we could see the buy the dippers appear here, especially as we could see buy the rumour sell the news playing out mostly this week ahead of the Jackson Hole summit and tomorrows Fed minutes.
Lower support is then at the 8240 as mentioned, and we also have S2 at 8233. As such, should it get that low then a long here is worth taking.
I wouldn't be surprised if we see a bit of bearish overall today though, especially given the climb yesterday - profit taking and a bit of caution.
Not much more to say really, so good luck today.
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