Technical analysis for FTSE 100 for 26th February 2024
The FTSE 100 closed higher Friday, with Standard Chartered in the lead after it announced bumper investor payouts, though weekly performance in the blue-chip index was lacklustre following mixed corporate earnings.
The FTSE 100 index edged up 0.3% on Friday but posted marginal weekly losses as mixed earnings in the region and receding bets of early interest rate cuts from global central banks dented optimism.
Money markets are now largely pricing in the first rate cut from the Bank of England in August, compared with June for the U.S. Federal Reserve.
Contrary to some solid economic data this week, a survey on Friday showed British consumer sentiment fell for the first time in four months in February as households took a gloomier view of their recent personal finances and the broader economic outlook.
Stocks in Asia fell alongside Europe and US equity futures as investors geared up for a busy week with data due on Chinese activity gauges and the Federal Reserve’s preferred measure of inflation. MSCI Inc.’s Asia Pacific gauge erased earlier gains as Hong Kong and mainland China stocks slipped. Contracts for Europe and US shares also declined after the S&P 500 rally stalled at the end of last week, weighed by profit taking in megacap tech stocks.
Asian shares stalled short of seven-month highs on Monday as investors awaited inflation data from the United States, Japan and Europe that will help refine expectations for future rate moves.
The Federal Reserve's favoured measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday and forecasts are for a rise of 0.4%. It was not long ago investors were hoping for just a 0.2% increase but high readings on consumer and producer prices suggest the risk is for a result as high as 0.5%.
Markets have already pushed out the likely timing of a first Fed easing from May to June, which is currently priced at around a 70% probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.
There are at least 10 Fed speakers on the docket this week, and are likely to repeat their mantra of staying cautious on rates. The ISM manufacturing survey is due on Friday, as are PMIs for China.
Despite the hawkish shift, Wall Street still managed to make new highs helped by huge gains for AI diva Nvidia which added $277 billion in market value last week.
FTSE 100 technical analysis for today, 26th February 2024
The 7720 area remains the line in the sand for the moment that the bulls will need to break as that opens up the 7750 level above. 7726 is now R1 for today. To start with the 2h chart is bullish and has support at the 7692 level so should we see a break of this then a drop down to the 7650 level looks quite likely.
The shorter time frames, 30m and so on, are bearish to start with after the Asian markets dropped back a bit. We may well see a bull Monday be a bit tempered today, and some profit taking and shorting the rallies. There is also quite a lot of data this week which could also lead to some profit taking.
Initial resistance is at the 7700 daily pivot so an early break of this will likely see a retest of Friday's high at just below that 7720. Of course, the more a resistance (or support) is tested the more likely it is to break, and having already had the double top at 7720, any break will likely see that 7750 area.
Support initially is at the 7685 area where we have S1 and the 30m 200ema. A fair bit of bunching initially, so fully expecting a break one way or the other today. Below that 7680 then 7650 as mentioned, and should the bears break that then 7634 is next. I don't think that we will get that low today though and any bearishness may well get halted at the 7650.
The daily chart continues to be bullish, and both the Raffs continue to head up, along with the bullish 2h chart to start with. That said, the S&P is getting into some 30m resistance at the 5100 area so we could well see a stutter on that there, which may well weigh on the FTSE100.
Slightly remote chance but if the bulls were to break above the 7750 level today then 7769 S3 and the round number at 7800 would be next up.
Not too much more to say really - am just looking at 7725 and 7750 as resistance, 7680 and 7650 as support.
Good luck today.
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