Technical analysis for FTSE 100 for 26th January 2024
Britain's benchmark index was muted on Thursday and mid-cap stocks climbed following corporate updates, while hotter-than-expected U.S. GDP data tempered hopes of early interest rate cuts by global central banks. The blue-chip FTSE 100 was flat, while the domestically focussed FTSE 250 added 0.3%, reversing early losses.
Industry survey showed British retail sales volumes slid in January at the fastest pace in three years, indicating that retailers are still feeling the strain from increases in prices and interest rates over the last two years.
Meanwhile, much-awaited U.S. GDP data showed the economy grew faster than expected in the fourth quarter, suggesting that March would be too soon for the Federal Reserve to start cutting interest rates.
The European Central Bank kept rates unchanged at a record high 4%, as expected in its latest monetary policy meeting, giving no hint that policymakers are even contemplating a start to easing.
The Bank of England's policy decision is due next week, and traders are pricing in the likelihood of UK interest rates starting to decline from June.
Asian shares declined on Friday, as optimism over China’s rescue measures faded and investors parsed weak results from Intel Corp. Shares in mainland China and Hong Kong dropped after the biggest three-day rally since 2022. Morgan Stanley cut its targets for major Chinese stock indexes, saying the country’s challenges with debt, demographics and deflation are among hurdles to further equity gains.
Asian shares were set on Friday to snap a three-week losing streak, while investors awaited a key reading on U.S. inflation later in the day to gauge the outlook for U.S. rates.
FTSE 100 technical analysis for today, 26th January 2024
The bulls have managed to pull away from the 7500 level and we finally tested the 7570 level overnight. There is the potential for a push a bit higher towards the 7591 level this morning though, where we have the R2 and key fib resistant levels. 7575 does still remain as the 25ema on the daily chart though so I am still keeping an eye on this to start with.
Initially it does look like we will get a rise though the rate of climb on the S&P500 has slowed a bit now, after testing the 4900 level and seeing a drop off. That could temper the upside for the moment and it's also a Friday with some profit taking likely later in the day. We have the PCE data out in the States at 13:30 so we may well see a bit of volatility then. The core PCE is forecasted have dropped slightly to 3%.
Above the 7591 level then the R3 level at 7623 is next up. Might be a big ask for a Friday but you never know! The bulls would certainly be on the front foot to end the week if we manage to break and hold above the 7575 level.
On the support side of things, then the daily pivot at 7536 is key to start with and that is also just below the green 30m coral support at 7545 so we may well see this hold any initial test. Lower down than 7513 is S1, with a potential test of the daily support at 74670 at some point soon.
I mentioned about shorting the rallies earlier this week and that is playing out in the S&P500 quite nicely. The 2h chart has gone bearish on that now and the 4905 level is locked in as resistance. That could well coincide with a decent double top as well with Wednesdays high, so keep an eye on this level for a test and reaction today.
The charts imply that we will see an early rise and then potentially a dip from some of the key resistance levels that are showing. That said the bulls will certainly be keen to end the week strongly though!
Good luck today and have a great weekend!
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