Technical analysis for FTSE 100 for 28th September 2023
Shares in Asia fell as a jump in global oil prices emboldened the higher-for-longer rates narrative, sapping risk sentiment as some markets in the region prepare for a holiday. The US benchmark oil price hit $95 a barrel for the first time in more than a year after stockpiles fell at a major storage hub. The increase added to concerns that inflation would remain elevated, keeping the 10-year Treasury yield near the 4.6% it reached in the previous session, the highest since 2007.
Oil prices scaled one-year highs on Thursday, while world stocks eyed their longest losing streak in two years as worries deepened about persistently high interest rates, sending investors to shelter in the safety of a surging U.S. dollar.
A surprisingly big drop in crude stocks at Cushing, Oklahoma, stoked concern that fuel demand is outstripping production right when markets least needed another supply-side shock.
U.S. crude rose 3.6% overnight and another 1% on Thursday to hit $95 a barrel for the first time since August 2022. Brent futures hit a one-year high at $97.69. The prospect of higher energy costs and the spectre of sticky inflation put more pressure on longer-dated bonds, with benchmark 10-year Treasury yields up more than 50 basis points this month to hit a 16-year peak at 4.642%.
FTSE 100 technical analysis for today, 28th September 2023
A test of the 7555 support level after hours last night saw the bulls react and drive it up to 7615 overnight lending weight to the validity of that as a support level. The question for today is if that is the one and only test we will get of that level and we start to see the October strength kicking in. I am thinking though that we may well get an in hours test of the 7566 level this morning, to test the 25ema within trading hours.
The ASX200 had a rise and dip play out and we may well see the same.
Initially we have resistance at the 7640 level once again with the key fib and R1 here, and should we see that we may well get another drop off that. As we approach month end we may well see a bit more down side as well as the bears continue to short the rallies (as the bias is bearish at the moment to end the month).
That said the bulls will be on the defensive and trying to keep the price above the 7600 level to close the month out.
Below the 7550 level then 7538 is the key fib, and just below S1 at 7546. If it gets proper bearish though then a slide to test S2 and the next key round number at 7503 would probably materialise.
Upside, above the 7640 level then 7690 is R2 and could well be possible, if the daily supports hold today , again at the 7550 area. With the bottom of the 20d Raff channel, S1 and the daily 200ema here then I still think that we will see this level hold.
The S&P500 has been very bearish and a further increase in oil prices to just shy of $100 is certainly weighing things down as it doesn't help the Fed. It is trying to defend the daily 200ema though at this 4270 level, and yesterday's daily candle had a pretty long tail as the bulls fought back well from 4240.
So, once again keep an eye on 7550 level for support and 7640 for initial resistance.
Good luck today.
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