Technical analysis for FTSE 100 for 25th October 2023

The FTSE 100 closed 0.2pc higher at 7,389.70, while the FTSE 250 midcap index dropped 0.38pc to 16,994.10.

Shares in Asia pushed higher after the government stepped up support for China’s economy and stock trading, buoying optimism. Metals rallied. Mainland China shares advanced while the Hang Seng Tech Index jumped by the most since the end of August, on the government’s support plans that include issuing additional sovereign debt and raising the budget deficit ratio. At the same time, Hong Kong is reversing an emergency increase in the stamp duty on stock trades as officials seek to revive the city’s status as a hub for finance and initial public offerings.

China led Asia’s stock markets higher on Wednesday as investors cheered the approval of a trillion-yuan sovereign bond issue as a harbinger of stimulus, while the Aussie dollar hit a two-week high as hotter-than-expected inflation lifted rate forecasts.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9% and the Hang Seng 2%. Japan’s Nikkei rose 1.1%.

Bonds have held onto a bounce-back after the 10-year Treasury yield breached 5% on Monday, with the benchmark yield firm at 4.82% in Tokyo trade.

FTSE 100 technical analysis for today, 25th October 2023

We got the dip and rise yesterday with a cheeky spike down to 7322 which is now the line in the sand that the bulls will need to defend. We also have the Hull MA support here on the 2h so if it is seen again then it's another chance to get long here. The bulls will be keen to get it back above 7400 as after attempting that yesterday it has since dropped back.

Initially today we may well get a dip down and then a climb in what is becoming a very familiar pattern. The ASX200 performed that today and if the bears were to break the initial support from the daily pivot and the 30m coral at 7385 then we may well do the same.

The 10d Raff channel continues to head down, and the 20d has now joined it as the end of October weakness pans out. The bottom of the 20d channel is at the 7290 level and lining up with the S2 level, so should the 7320 break today this is the next key support.

On the upside, if the bulls were to break 7435 then 7470 is the next key level and then a test of the 25ema on the daily at 7515 looms - in theory with a bearish daily chart, we should see a reaction here and the bulls attempt another move.

We have another speech from Fed Chair Powell late tonight (21:35) which may once again reaffirm traders expectations for a pause in rate rises. Inflation figures from Australia today showed a further slowing.

We may well be getting to the point where we can now start to think about swing longs for a little while, and certainly for a rise towards the 7515 level, probably this week. The S&P will have to be the driver though and the bulls will need to break above the 4300 level really and make it hold.

Generally across the board it look like we may well get a dip and rise today once again.

Good luck.

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