Technical analysis for FTSE 100 for 19th August 2024
The FTSE 100 slipped on Friday, after a five-day rise that paved the way for a strong weekly gain for the benchmark stock index, as abating fears of a likely recession in the United States bolstered investor sentiment. Thursday's U.S. retail sales data helped allay some of the recent recession fears in the world's largest economy, helping the UK's benchmark index to reclaim levels seen before Aug. 2, when a U.S. payrolls data deepened a heavy selloff in risk assets globally.
Data showed British retail sales rose 0.5% in July, in line with expectations, after a weak performance in June weighed on economic growth. The squeeze on British consumers from high inflation in 2022 and 2023 is beginning to ease, in light of the Bank of England this month cutting interest rates for the first time from their 16-year high.
Asia & Overnight
Asian stocks edged up and the dollar slid on Monday after global equities enjoyed their best week in nine months on expectations the U.S. economy would dodge a recession and cooling inflation would kick off a cycle of interest rate cuts.
The prospect of lower borrowing costs saw gold clear $2,500 an ounce for the first time and the dollar dip against the euro, while the yen made a sudden lunge higher that weighed on the Nikkei.
Federal Reserve members Mary Daly and Austan Goolsbee were out over the weekend to flag the possibility of easing in September, while minutes of the last policy meeting due this week should underline the dovish outlook.
Fed Chair Jerome Powell speaks in Jackson Hole on Friday and investors assume he will acknowledge the case for a cut. Futures are fully priced for a quarter-point move, and imply a 25% chance of 50 basis points with much depending on what the next payrolls report shows.
Oil prices dipped again as concerns about Chinese demand continued to weigh on sentiment. Brent fell 11 cents to $79.57 a barrel, while U.S. crude lost 20 cents to $76.45 per barrel.
FTSE 100 technical analysis for today, 19th August 2024
The FTSE100 has just dipped below the 8300 level to start the week and is testing the 30m 200ema to start with at 8285. We also have a bearish 2h chart in play to start the week given the drop on Friday from the 8360 area. As such we may well see a dip and rise play out today with some bull Monday kicking in later on.
Below the 8285 support level I am liking the look of the 8250 level as we have the key fib at 8257, along with the S2 at 8247. A bounce from here would fit well, though there is still the possibility of the test of the daily 25ema mentioned last week, which now sits at the 8230 level. The bulls will certainly be keen to try and keep the climb going following the rapid sell off last week, and with low volume summer trading we are seeing over reactions.
If 8230 were to break today though then the next daily support level is 8203 for S3, and also the 8222 for the bottom of the 10d Raff channel. I'd be more inclined to go with the 8250, and possibly 8230 holding well though.
Resistance wise the daily pivot at 8316 is the main one to look for to start with, and that is just above the red 30m coral at the 8310 level. If the bulls were able to break above these then the R1 level at 8342 is the main one I am looking at, as that also aligns with the Hull MA on the 2h chart and would be the first test of that since it went bearish. Ergo it should get a reaction.
It's certainly looking like a weaker start to the week but I am keeping a close eye on the supports mentioned. The talk of US rate cuts is also getting louder which may help to underpin a bit of an equity climb.
Good luck today.
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