Technical analysis for FTSE 100 for 22nd July 2024
London stocks finished the week lower amid a global cyber outage on Friday as investors assessed a fall in domestic retail sales in June, while commodity-linked stocks dropped, tracking declines in prices of copper, gold and other metals.
The blue-chip FTSE 100 index was down 0.6%. The mid-cap FTSE 250 was off 0.8%. Both indexes snapped two weeks of consecutive gains.
As mentioned in Fridays email to be expected, US President Joe Biden has finally abandoned his reelection bid, bowing to relentless pressure from Democrats to drop out over fears he was too feeble to beat Donald Trump. Biden said he would serve out his term but endorsed Vice President Kamala Harris to take his place as the Democratic nominee. Harris pledged to do “everything in my power” to beat Donald Trump at the polls. But Harris isn’t yet a done deal and she could face a challenge for the nomination from others.
The market reaction so far has been measured. Wall Street futures are a shade firmer, bond yields down a tick and the dollar little changed overall.
Goldman Sachs in a note said they did not expect the Democrats' fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.
The other main event was a surprise rate cut from China's central bank, which trimmed its seven-day repo rate by 10 basis points. That saw longer-term borrowing costs decline by a similar amount, while bond yields dipped across the curve despite recent efforts by the PBOC to push them higher.
Much of Asia was also in the red, with Taiwan taking a beating amid worries about U.S. restrictions on chip sales and the risk a Trump administration would slap tariffs on a host of imports, possibly triggering a global trade war.
Tech stocks saw notable rotation out to smaller caps and banks last week, erasing about $900 billion from the S&P 500 technology sector.
Key developments that could influence markets on Monday:
- Bank of England Executive Director Victoria Saporta speech
- German Retail Sales
- Federal Reserve Bank of Chicago issues National Activity Index for June
- Company earnings include Verizon, Nucor and Brown & Brown
FTSE 100 technical analysis for today, 22nd July 2024
The markets will be digesting the news about Biden, but will likely want to show a bit of strength so that Western politics don't become too much of a global laughing stock. As such, a kick up to the first key resistance level at 8200 is likely. We have the round number, R1 and the red 2h coral all here. If that were to act as resistance initially then a dip down to the 8163 level would make sense, and fit the charts well.
8163 area is then decent support with the daily pivot and the green 30m coral here. I would like to see this hold for a rise then back up and ultimately a bit of a bull Monday and a test of the 8228 resistance level. We also have 8223 as a key daily level to keep an eye on so we could see a stutter in this area unless they pump it a bit more and we rise towards the 8243 key fib level.
If we do see 8243 then a short here is worth a go as we could see some caution kick in around here. The daily chart has both the Raff channels heading down still, though I imagine the bulls will be fighting tooth and nail to get the 2h chart back to bullish again.
Above 8250 and R3 is close at 8263, and then obviously the round number at 8300. Feels a bit of a big ask to get that though today.
Support wise, below the 8160 level then 8124 is the key fib and just below the 8127 low we got on Friday. We could see this area hold again, otherwise a test of 8105 beckons in fairly short order.
Not a massive amount due on the news front either today so it's really a case of keeping an eye on the 8200 and 8245 levels for resistance, 8160 8125 and 8105 for support.
Good luck today.
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