Technical analysis for FTSE 100 for 4th December 2023
The FTSE 100 hit a six-week high on Friday boosted by solid gains in metals miners, while markets cheered after Federal Reserve Chair Jerome Powell acknowledged progress in lowering inflation, keeping alive hopes that interest rates have peaked. The benchmark FTSE 100 share index rose 1.0%, hitting its highest level since Oct. 19, and the more domestically-focussed FTSE 250 midcap index also added 1.0%.
A private survey showed China's factory activity unexpectedly expanded in November, pushing China-exposed miners 4.5% higher. Precious metal miners added 2.8%, tracking a rise in precious metals prices.
Powell's acknowledgement that U.S. inflation averaged 2.5% over the six months ending in October, near the Fed's 2% target, and that monetary policy was slowing the economy as expected, boosted the gains for the two major UK indexes.
Treasuries slipped and gold fell from session highs on Monday, as markets pared some of the Friday moves that defied Federal Reserve Chair Jerome Powell’s reminder that policymakers are in no hurry to cut interest rates.
Asian shares turned mixed on Monday while gold spiked to all-time peaks above $2,100 at the start of a busy week for economic data that will test market wagers for early and aggressive rate cuts from major central banks next year.
In particular, the U.S. November payrolls report on Friday needs to be solid enough to support the economic soft-landing scenario, but not so strong as to threaten the chance of easing. Median forecasts are for payrolls to rise 180,000, keeping unemployment steady at 3.9%.
FTSE 100 technical analysis for today, 4th December 2023
We managed to get to the upper resistance at 7540 on Friday but there wasn't much of a reaction there at the time. However it has dropped off a bit from there overnight so that still remains as the key resistance level for the moment.
The bulls will be aiming for a bull Monday, and a break of that to target the 7561 level where we have the R1 and top of the 10d Raff channel. As such, if we were to get that high today I would expect a stutter here and it's worth a short off this level.
Above that then 7590 is R2, though that feels a bit optimistic for today.
Initial support is at 7513 with the daily pivot here, and then 7500 round number below that. You would expect the bulls will be keen to defend this area, at least initially, having made so much effort on Friday to break above it and hold.
Below the 7500 level then the bears will be aiming to break 7480. This however is decent support with S1 and the 30m 200ema here. I would actually quite like to see a bounce off this level, as we also have the Hull MA here on the 2h timeframe so it would fit the chart pretty well and set up for some upside during today.
7460 is then the now green 2h coral below that.
We have US factory orders news at 15:00, with a forecasted drop to -2.6% which could help the bears then, and lead us into a bear Tuesday tomorrow.
December has started pretty strongly so far (especially gold which has even managed to pass 2100 overnight!) and we may well see that run continue into year end. The ball is firmly in the bulls court to build on the recent strength.
Good luck today.
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