Technical analysis for FTSE 100 for 18th July 2024
Britain's FTSE 100 closed higher on Wednesday as geopolitical risks drove gains in defensive sectors such as healthcare and consumer goods, while stronger-than-expected UK inflation data eased bets of rate cuts from the Bank of England (BoE).
The blue-chip FTSE 100 index rose 0.3%, recovering from losses of as much as 0.4% earlier in the session.
Rattling global investors, U.S. presidential candidate Donald Trump questioned U.S. support for Taiwan and a report said Washington was mulling tighter curbs on the export of advanced semiconductor technology to China.
Technology stocks across the globe took a hammering but the defensive stocks that investors flock to during times of economic uncertainty rose.
British consumer prices data showed that inflation held at 2%, defying forecasts of a slight fall, adding to uncertainty around when the BoE would start its monetary policy easing cycle. The odds of a rate cut in August dropped to 33%, from 49% before the data release.
Focus will be on Thursday's UK payrolls and retail sales data which could further sway expectations around the BoE's policy action in August.
Asia & Overnight
Asian equities fell on Thursday, led by chip stocks as investors fret over the prospect of escalating trade tensions between the U.S. and China, while the yen surged to a six-week high in the wake of suspected interventions by Tokyo last week.
The U.S. dollar loitered near its weakest in four months against a basket of currencies as comments from Federal Reserve officials bolstered the case for a cut in September, keeping gold prices near record highs.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.57%, with tech heavy South Korean shares down nearly 1%. The yen's strength and a sharp drop in chip stocks took Japan's Nikkei down 2%.
China stocks also slipped as investors awaited policy news from a key leadership gathering in Beijing. The Shanghai Composite index was down 0.4% and blue-chip CSI300 index off 0.5%.
A report that the United States was considering tighter curbs on exports of advanced semiconductor technology to China sent chip stocks and the Nasdaq tumbling overnight, led by AI darling Nvidia and Apple.
Investor nerves were also jangled after Republican presidential candidate Donald Trump said Taiwan "did take about 100% of our chip business" and should pay the U.S. for its defence as it does not give the country anything.
Investor attention will be on the policy decision from the European Central Bank later in the day, where the central bank is expected to stand pat, although comments from officials will be crucial in gauging when the next rate cut will come.
FTSE 100 technical analysis for today, 18th July 2024
The bulls are fighting back and held the 8140 low area yesterday top get the price back above 8200 to start with today. As such we may well see some more upside today with the 8272 and 8300 levels as the key resistance to look for. A short at both of these levels is worth a go.
This is despite the bearish US markets at the moment, with the Nasdaq dropping significantly this week.
The overnight high level of 8244 tallies with the key fib and R1 so we could see a bit of profit taking here to start with and a drop down to the first key support at the 8200 area where we have the 30m coral and the 200ema.
8186 is just below that with the daily pivot here, and should that get tested I would like to see it hold, though favouring a bounce off the 8200 level if we do get a bit of a dip down.
With the climb from 8140 the 2h chart has gone bullish again and also has support at 8186 with the Hull MA here.
On the news front we have the UK employment data out now, and then more significantly the ECB rate decision at 13:15 - no change expected.
If the bears were to break 8185 then yesterday's low at 8130 is the next one, with that 8107 below that still looking relevant. Thinking that we will have a more optimistic day today though (hopefully not famous last words!)
Above the 8300 level if they really go for it then 8315 is the red daily coral followed by 8329 for R3. The bulls might struggle initially in this area if we see it, as that would also be a breakout above the Raff channels.
So generally, it's still buy the dip really, look for the 8200 and 8185 support levels. Let's see if the bulls can get it to 8300 today......
Good luck!
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