Bulls defend with 8500 tantalisingly close | 8419 8401 8381 support | 8467 8507 resistance

Bulls defend with 8500 tantalisingly close | 8419 8401 8381 support | 8467 8507 resistance

Technical analysis for FTSE 100 for 16th May 2024

The FTSE 100 closed at an all-time high on Wednesday, lifted in part by housebuilder stocks buoyed by hopes of an interest rate cut, while Burberry's shares sank after it reported a sharp fall in quarterly sales.

The blue-chip rose 0.2% to close at 8445.80 points. The index touched an intraday record of 8474.71 points earlier before paring some gains.

Wall Street's S&P 500 touched its life high after data showed U.S. consumer prices increased less than expected in April, boosting financial market expectations for a September interest rate cut.

Global stock markets rose to record highs while U.S. Treasury yields and the U.S. dollar fell on Wednesday as data showed U.S. consumer prices rose less than expected in April, suggesting inflation has resumed a downward trend in the second quarter.

The CPI report raised expectations that the Federal Reserve will cut interest rates two times this year. Traders priced in a 56% chance of a rate cut by the Bank of England in June, from 50% before the data.

The Dow and S&P 500 registered record closing highs for the first time since March 28 and the Nasdaq posted a record closing high for the second session in a row, while the MSCI world stock index was also set for a second straight record high close.

Asia & Overnight
Asian stock markets rallied on Thursday, buoyed by Wall Street's surge to all-time peaks overnight after a milder U.S. inflation report raised expectations the Federal Reserve will deliver two interest rate cuts this year.

The dollar remained on the back foot, sagging to fresh multi-week lows against peers including the euro and sterling.

U.S. Treasury yields extended their retreat in Tokyo trading, sinking to six-week troughs. That helped the beaten-down yen to continue its recovery, even as data showed the Japanese economy contracted more than expected in the first quarter.

Gold marched back toward record levels and crude oil added to gains after rebounding strongly overnight from a two-month trough.

U.S. data on Wednesday showed the consumer price index (CPI) rose by 0.3% in April, below an expected 0.4% gain, raising hopes the Fed can cut rates by 50 basis points this year, with the first quarter-point reduction fully priced for September.

The data provided succour to markets after higher-than-expected U.S. consumer prices in the first quarter had led to a sharp paring of rate cut bets and even stoked some worries of an additional hike.

Brent futures rose 39 cents, or 0.47%, to $83.14 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 42 cents, or 0.53%, to $79.05, adding to Wednesday's strong gains.

FTSE 100 technical analysis for today, 16th May 2024

A small dip below the 8430 support yesterday due to the 20 point dividend, however that support area has held overnight and we are back challenging a break of the 8450 level as the bulls continue to try for the 8500/8515 level.

With the strength across most indices yesterday that may well play out today and we get some more upside, if they can break R1 at 8467 to start with.

Initial support is at daily pivot at the 8440 level and the bulls will be keen to hold this, as a break lower will likely lead to the 8420 200ema level, with 8401 S1 below that. We also have the bottom of the 10d Raff channel here, so should we see a test of that then a bounce here would be quite likely.

Resistance wise, 8467 as mentioned being R1, and then the 8507 R2 and daily resistance area at 8515 are in play. Again, if we see that then a short here is worth a go. The first break of 8500 may well see some profit taking and a subsequent drop back. R3 is at 8534 but I am not expecting it to get that high today.

The Raff channels remain positive and heading up, as they also are for the Dax40 & S&P500, along with now firmly bullish 2h charts on those two. The S&P500 put in a decent bounce off its Hull MA support yesterday at the 5245 level. However, the FTSE100 2h chart is bearish and has 8460 as resistance to start with on that, hence thinking that an initial dip off this is likely this morning, especially as it ties in with R1.

The 30m chart is bullish though and the coral is about to go green with support aligning at the daily pivot also. A very tight range between the first support and resistance levels!

It still feels like buying the dip is the right play for the moment, but I am still mindful of the seasonality which sees a pull back in the second half of May - something to bear in mind.

Looking ahead, highlights include US IJC, Philly Fed, BoE’s Greene, Fed’s Harker, Mester, Bostic & Barr, Supply from Spain, France & US, Earnings from Deutsche Telekom, Siemens, easyJet, Applied Materials, Deere & Walmart.

Good luck today.

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