Technical analysis for FTSE 100 for 16th July 2024
Asian shares fell on Tuesday as investors pondered the prospect of a Trump victory and what that would mean for China, while the dollar climbed for a second day even though dovish Fed comments fuelled bets of more U.S. rate cuts this year.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%, having eased 0.3% on Monday. Japan returned from a public holiday, with the Nikkei index up 0.4%.
Overnight, investors continued to digest the fallout from the attempted assassination on Saturday of former U.S. President Donald Trump, who is favourite to win the White House in November and who on Monday nominated his vice presidential running mate J.D. Vance.
Wall Street closed higher, with the Dow Jones notching an all-time closing high thanks to energy and banking shares. Bitcoin jumped 6%, gold climbed towards a record high and the yield curve steepened as investors favoured so called Trump-victory trades.
The Shanghai Composite index fell 0.3%, while Hong Kong's Hang Seng index lost 1.4%, having already dropped 1.5% the day before soft economic data from China heightened the risk that Beijing could miss its 5% growth target this year, barring forceful stimulus.
Also cheering Wall Street, Fed Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter do "add somewhat to confidence" that inflation is returning to the Fed's target in a sustainable fashion.
Markets have now fully priced in a quarter-point rate cut from the Fed in September, with a total easing of 68 basis points expected by the end of the year.
That kept a lid on the U.S. dollar overnight, although it has attracted buying interest as some investors bet on a Trump victory. The dollar index firmed 0.1% on Tuesday against a basket of major currencies to 104.34.
Oil prices ticked down on worries about a slowing Chinese economy crimping demand. Brent futures fell 0.2% to $84.72 a barrel, while U.S. West Texas Intermediate (WTI) crude also slipped 0.2% to $81.77.
In Europe, futures indicate bourses are due for a subdued start on Tuesday and, with little in the economic calendar for investors to take cues from, Trump and Powell will yet again dictate market movement.
FTSE 100 technical analysis for today, 16th July 2024
We look set for a bear Tuesday and a possible test of the 8105 support area which may well see a bounce. The 2h chart is negative for today following the weakness yesterday (distinct lack of a bull Monday for the FTSE100!) and has key resistance to start with today at the 8223 area, with both the Hull MA and coral here.
We are also getting close to a test of the bottom of the 10d Raff channel at 8123. That channel is rising and it will be the first test since it did turn so we should in theory see some support around this area. Initially we also have the S1 and key fib at 8136 which of course the bears will be keen to break.
The main news event likely to create a stir is the US retail sales at 13:30, and the forecast is 0%.
Resistance wise, the bulls will need to be fairly quick out the blocks if they are to prevent a drop down to that 8100 area, and will be looking for a rise to at least the 8205 area. 8196 is also the daily pivot and as such I am expecting this area to be fairly strong resistance, with a possible overshoot to test the 8220 2h levels mentioned above.
The S&P500 and NASDAQ are both looking a lot stronger than the European markets still, with the Dax40 also having a very bearish session yesterday and a test of 18500 looming this morning. On the Dax the Raff channels do continue to head up though, and as such we may well see the key fib and S1 area around the 18500 hold.
Cable is also weighing on the FTSE100, having risen towards the 130 level. Generally speaking as that goes up, the FTSE100 goes down as many FTSE100 companies earn in dollars.
So expecting a bit of a bearish session today and keeping a close eye on that 8105 area for support and a decent bounce. A break of that will likely see 8050 and a test of S3 at 8046.
Good luck today.
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