Bulls need to defend today | 7853 7812 support | 7913 7954 resistance

Bulls need to defend today | 7853 7812 support | 7913 7954 resistance

Technical analysis for FTSE 100 for 18th April 2024

The UK's benchmark index FTSE 100 climbed on Wednesday, underpinned by industrial metal miners, while the pound strengthened on growing doubts over the prospect of early rate cuts by the Bank of England.

The resources-heavy FTSE 100 advanced 0.4% and the mid-cap FTSE 250 traded flat at the close after posting steep losses on Tuesday.

Industrial metal miners gained 2.2%, with shares of Rio Tinto rising 2.6%, after the miner published a steady operations update. The automobile and parts sector was the biggest loser, dropping 1.2%.

The pound slipped against the dollar and traded last at $1.2445 after Britain's inflation slowed to 3.2% in March, compared with 3.4% a month ago, but was slightly higher than economists' expectations of 3.1%, according to a Reuters poll.

Traders expect the Bank of England to cut rates by 40 basis points in 2024, with the possibility of a first rate cut only in September.

BoE policymaker Megan Greene on Wednesday said that the tensions in the Middle East could pose a risk to the inflation outlook, including by heightening inflation expectations.

Meanwhile, Fed Chair Jerome Powell said on Tuesday that monetary policy needs to be restrictive for longer, further dashing investors' hopes for meaningful reductions in borrowing costs this year.

Asian stocks crept higher in a mixed session on Thursday, while the dollar took a breather and bond markets steadied as investors stepped back to assess the interest rate outlook.

Oil nursed its sharpest fall in two-and-a-half months on demand worries and the lack, so far, of an obvious Israeli or U.S. response to Iran's weekend attack.

Analysts do not expect dramatic new sanctions on Iranian oil, although the U.S. was set to reimpose oil sanctions on Venezuela which steadied Brent crude futures at $87.37 a barrel after Wednesday's $2.70-a-barrel drop.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4% but regional moves were uneven, with gains in South Korea and Australia but falls elsewhere. Japan's Nikkei fell 0.4% and with a drop of 4.3% so far this week is eyeing its largest weekly loss since December 2022.

Wall Street indexes fell overnight and S&P 500 futures were flat in early Asia trade. The dollar dipped slightly overnight and news of an unusual trilateral agreement between the U.S., Japan and Korea to consult closely on foreign exchange left the door open to intervention to slow dollar gains in Asia.

A handful of U.S. and European central bankers speak later on Thursday. U.S. jobless claims data is due and earnings at Blackstone and Netflix will be closely watched.

FTSE 100 technical analysis for today, 18th April 2024

Great bounce off the 7800 yesterday, and the 5040 S&P500 level held initially. Despite then dropping to the 5010 the bulls fought back and if they can keep that momentum going then we could be on for a test of the 5100 area. Likewise the 7913 FTSE100 resistance looks like it might be tested  today.

That is the first hurdle for the bulls to break, and if they do so then 7952 R2 is next up.

Despite the S&P500 bounce the daily chart has locked in bearish now with the 25ema resistance at the 5136 level. As such the bulls will be wanting to break this to reverse the negative April. Is this bounce a dead cat or a sign of some stability coming in..... backdrop is still on tenterhooks and gold is starting to tick up today, though oil has fallen. Nothing like a muddy picture!

Initial support for the FTSE100 is at the daily pivot at 7853 and the bulls will be keen to defend this, especially as the 2h chart is now bullish, with the Hull MA support at 7848 currently. Should we see a drop down to here then I would like to see a bounce at this level today.

Below 7850 then 7804 is the key fib and once again brings a potential break of the 7800 area. If it did so then I am still looking at the 7780 daily support, along with 7750 below that. Probably not that low today though, news notwithstanding.

The 10d Raff channel is now also heading down, while both the 10d and 20d on the S&P500 are heading down as that continues to weaken. The bulls will certainly be keen to break above the 5135 to reverse that!

Highlights on the market moving front include US IJC, Philly Fed, Comments from ECB’s de Guindos & Schnabel, Fed’s Williams, Bowman & Bostic, Supply from Spain, France & US, Earnings from EssilorLuxottica, L'Oreal, Danone, EasyJet, Rentokil, Segro, Nokia, TSMC, Netflix, Elevance Health & Blackstone.

Good luck today and keep an eye on the 7915 resistance, 7850 support.

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