Bulls need to break 8450 | 8484 above | 8400 support

Bulls need to break 8450 | 8484 above | 8400 support

Technical analysis for FTSE 100 for 13th May 2024

The FTSE 100 hit a record high for a fifth straight session on Friday as investors cheered the Bank of England's dovish tone while the British economy grew more than expected in the first quarter of the year.

The blue-chip FTSE 100 ended 0.6% higher, notching a new peak and breaching the 8,400 mark earlier in the session. The mid-cap FTSE 250 hit its highest level in more than two years and also closed 0.6% higher. Both indexes logged a third consecutive week of gains.

The British economy exited recession with stronger-than-expected growth of 0.6% in the first quarter, the most in nearly three years. That was faster than the 0.3% first quarter economic growth in the euro zone and the 0.4% in the United States.

While investors cheered as the Bank of England set the scene for a summer rate cut on Thursday, some economists suggested the stronger GDP growth could delay the Bank's efforts and stoke inflation.

Asian shares crept to 15-month highs on Monday in a week where inflation figures could make or break hopes for earlier U.S. rate cuts, while Chinese activity data will test optimism about a sustained recovery in the world's No. 2 economy.

Beijing has already reported a welcome pickup in inflation to an annual 0.3% in April, helping to soothe worries about a slide into prolonged deflation. Forecasts favour further gains in April retail sales and industrial output due on Friday.

Chinese authorities are also set to sell 1 trillion yuan ($138.24 billion) in longer-dated bonds to help fund stimulus spending at home.

The improved sentiment has helped lift Chinese blue chips to a seven-month high. The index was 0.1% softer on Monday with some sectors pressured by reports the White House was about to release details of new tariffs on Chinese goods.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2%, after rallying for three weeks straight.

Japan's Nikkei was flat, still saddled with speculation further losses for the yen could lead the Bank of Japan to raise rates in the next few months.

Globally, much now depends on whether the U.S. April inflation report will show a moderation after three months of upside surprises. Median forecasts are for core consumer prices to rise 0.3% in the month, compared to 0.4% in March, pulling the annual rate down to 3.6%.

Upbeat US Earnings
EUROSTOXX 50 futures were steady, while FTSE futures dipped 0.2%. S&P 500 futures and Nasdaq futures were both little changed early on Monday, after rallying last week as company earnings came in strong.

With 80% of the S&P 500 having reported results, companies are on track to have increased earnings by 7.8%, well ahead of the April expectation of 5.1%.

Oil prices faded late last week as U.S. gasoline and distillate inventories rose ahead of the start of the summer driving season. Brent was down another 22 cents at $82.57 a barrel, while U.S. crude dipped 17 cents to $78.09 per barrel.

FTSE 100 technical analysis for today, 13th May 2024

Having ended the week strongly the FTSE100 is starting above the 8400 level and may well push for 8500 this week, dodgy news notwithstanding. The longer term daily charts remain bullish with steeply ascending Raff channels and with R3 at 8511 for today the bulls will be keen to get a bull Monday in.

Initial resistance is at the 30m coral at the 8438 level though with 2h Hull resistance at 8450, along with R1 at 8452 we may well see an early attempt for this level, and a double top with Friday's high.

If the bears have a go here then we may well see a drop down to the 8400 area which is then the 2h coral support and the first test of it since it changed to green, along with the round number here. Slightly below is S1 at 8393, and with the bulls keen to keep the "buy the dip" going I would like to see a bounce here.

We are nearing the end of the earnings season in the US following a strong showing so far, so may well start to see some more trepidation kick in shortly. We also have the seasonality in play which usually sees a weaker second half of May.

Above the 8450 level then 8484 (nice symmetry) is R2 and the next level to keep an eye on as the bulls try for the 8500 area while they have the momentum. Slightly higher is R3 as mentioned at 8511. 8513 is also daily resistance so should it get that high today then a short at the 8510 area is worth a go.

Support wise below the S1 8393 then the bears would be looking towards the 8366 where we have a cluster of supports as you can see from the key levels table, and a possible bounce here. Below this then S3 at 8334 is next up though I am not expecting it to get that low today.

Not too much more to say; no really major news today, and it's just waiting for the US April inflation report.

Good luck today.

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