Technical analysis for FTSE 100 for 21st August 2024
The UK's FTSE 100 ended 1% lower on Tuesday, as a third straight day of falling crude prices weighed on energy stocks, and BT dropped to the bottom of FTSE 100 after rival CityFibre struck a deal with Sky.
The blue-chip FTSE 100 index had its biggest one-day decline since Aug. 5, while the mid-cap FTSE 250 lost 0.8%.
Energy shares slipped 2.8%, leading sectoral declines, as oil prices responded to expectations of weak Chinese demand and efforts to agree a ceasefire deal in Gaza, potentially easing supply concerns. Sector majors Shell and BP fell nearly 3%, each.
Investors are focused on Fed Chair Jerome Powell's speech at the annual Jackson Hole economic symposium in Wyoming later this week.
Purchasing managers index (PMI) numbers in the UK and U.S., alongside minutes of the Fed's last meeting are also on the market's radar in a relatively data-light week.
Asia & Overnight
Asian shares slipped on Wednesday as a stellar rebound in world stocks paused for breath, while bond yields and the dollar fell ahead of U.S. economic data and speeches from policymakers that are expected to make the case for interest rate cuts.
The S&P 500 snapped eight sessions of gains with a 0.2% overnight drop. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6%. Hong Kong's Hang Seng slumped 1.4% with JD.com dropping 11% after Bloomberg News reported top shareholder Walmart plans on selling its large stake.
Japan's Nikkei fell 1% at the open as a recovery from its collapse in early August runs into resistance around the 38,000 level, and more gains in the yen dented sentiment.
Later on Wednesday preliminary revisions to U.S. labour data are due to be published and a large downward revision is expected, which would support cutting interest rates. On Thursday, U.S. and global purchasing managers' index surveys are due.
The falling dollar has launched gold to record highs and returned the yen to 145.48 per greenback, a gain of 1.6% for the week so far and some 11% higher than last month's 38-year trough.
Interest rate futures have priced a 25 basis point U.S. rate cut next month, with a 1/3 chance of a 50 bp cut. Almost 100 bps in cuts are priced this year, and another 100 bps next year.
FTSE 100 technical analysis for today, 21st August 2024
Bear Tuesday played out well yesterday and now focus moves to the PMI data and Fed chair Powell's speech at the Jackson Hole symposium. The various 2h charts are bearish as you would expect after yesterdays declines, and the FTSE100 bulls will need to break the 8320 level now to regain the upper hand.
8340 is also the 2h red coral line so a couple of resistance levels that look quite key to start with. I wouldn't be surprised to see a rise today though and the price to get back above the 8300 level this morning. Sill buy the dip for the moment, but keep an eye on those resistance levels. Ultimately though the bulls will still be aiming for the 8420 level - maybe the news in the last couple of sessions this week will enable them to push on towards that.
Initial support is at the 8240 level, as per yesterdays analysis and in fact that has held overnight as well. This level looks fairly key as we have the daily 25ema here, and it's just below the bottom of the 10d Raff channel. However, if the bears were to break this then the next level to look for is 8206 where we have S1 and also the round number. There is also some daily support at 8203 so should it get that low then I would expect a bounce here.
Todays main event will be the FOMC minutes at 7pm, and we may well see a rise as we head towards that. The ASX200 had a slow steady rise today and we may well follow suit, especially if BP and Shell have a bit of a recovery.
If the bulls can break 8340 them 8387 R2 is the next target above that, on the way to a break of 8400. Probably not likely today but R3 is at 8426 and that ties in with the daily resistance as well.
So, keep an eye on 8320 and 8340 to start with, support at 8240 and 8206.
Good luck today.
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