Technical analysis for FTSE 100 for 20th May 2024
London's FTSE 100 ended the day and the week slightly lower on Friday, pausing after a run of record highs and ahead of a reading of UK inflation next week that will set near-term expectations for the timing of a first interest rate cut.
The blue-chip FTSE eased 0.2% on the day and was down 0.1% for the week, just snapping three weeks of gains. The midcap FTSE 250 index fell 0.4%.
UK consumer price inflation data is expected on Wednesday and will be parsed for clues on the timing of a first Bank of England interest rate cut.
Asia & Overnight
Asian shares started the week by rallying two-year highs on Monday, buoyed by China's strongest measures yet to address its property crisis and by expectations for global rate cuts within weeks, while the dollar steadied after a weekly drop.
Brent crude futures touched a one-week high of $84.14 a barrel in early trade, with the crash, in heavy fog, of a helicopter carrying Iran's president drawing traders' attention to the Middle East. Gold hovered close to a record high at $2,423 an ounce.
After world stocks made record highs last week in the wake of softening U.S. inflation, focus this week turns to policy speeches, meeting minutes, a central bank decision in New Zealand and Nvidia results, with a break in the data calendar.
Late last week, partly in response to some policymakers' comments, global bonds retraced a rally that had followed an encouraging fall in U.S. CPI data.
U.S. Federal Reserve Governor Michelle Bowman reiterated her view that she remains willing to hike rates should progress on taming inflation stall or reverse.
European Central Bank board member Isabel Schnabel said the June rate cut that markets have priced in for Europe "may be appropriate" but seemed to pour cold water on traders' expectations for a series of cuts to follow.
China announced "historic" steps on Friday to stabilise its property sector, with the central bank facilitating 1 trillion yuan ($138 billion) in extra funding and easing mortgage rules, and local governments set to buy "some" apartments.
Meeting minutes are due from Australia's central bank and the Federal Reserve. Flash global PMIs are also out this week.
S&P 500 futures rose 0.2% in early trade. Bitcoin dipped about 1% to $65,863.
FTSE 100 technical analysis for today, 20th May 2024
The bulls are starting the week in charge and on the front foot with the Asian session being very positive and hitting two year highs. That may well roll into a bull Monday here and in the US.
It will hinge on them defending the first support though at the daily pivot level at the 8422 area, where we also have the 30m 200ema and the 30m coral. With these 3 supports here it would be good to see a bounce here and a rise towards the daily resistance at the 8470 area.
If the bears break the 8420 level though then ultimately they are aiming for the 8385 level where there is the next cluster of supports with daily support, S2 and the 10d Raff channel bottom all here. Will it get that low?
The bulls will have to fight today though as the 2h chart is bearish, with 8440 as the initial Hull resistance which we are testing as I write this - hence thinking an initial drop - and the red coral at 8448 just above. The bulls therefore need to push through these two levels to start with.
There aren't any major news releases today, and there is a holiday in Germany, however the algorithms may well play out a dip and rise on that as well, as it is also testing the 2h resistance initially at the 18775 level, and has good support at 18700.
Back to the FTSE100 and if the bulls were to break above the 8484 level then the 8515 level remains, as well as some daily resistance slightly higher at the 8527 level. That might be a big ask for today though as the sentimentality is likely to start kicking in this week and I am thinking that we may well see a drop back laster this week. Headlines about record highs usually spur some profit taking after all.
Not much more to say really, keep an eye on the 8420 and 8385 support levels, 8450 and 8484 resistance.
Good luck today.
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