Technical analysis for FTSE 100 for 22nd April 2024
UK's FTSE 100 rose on Friday after dovish comments from Bank of England Deputy Governor Dave Ramsden on inflation boosted bets on monetary policy easing by the UK central bank in 2024, while Middle East tensions continued to sour sentiment.
Both of Britain's main equity gauges remained in the red for most of the session, but the benchmark FTSE 100 rebounded 0.2% in the last hour of trading. The midcap FTSE 250 was down 0.3%. Still, British stocks had their worst week in three months.
UK's 2-year gilt yields dropped to the lowest since April 15 at 4.398% after BoE's Ramsden said on Friday that inflation could hold around the central bank's 2% target for the next three years rather than rise higher later this year as set out in the BoE's most recent forecasts.
Traders now expect the central bank to cut interest rates by 53 basis points, starting in September.
The pound wavered against the U.S. dollar and last traded at 1.2405 following reports of Israel's attack on Iran.
Meanwhile, data showed UK retail sales stagnated in March, the first time sales have not grown in monthly terms since December.
Today
The relief rally spreading through Asian markets is set to sweep into Europe at the open, with the FTSE in particular set for a 1% pop.
Neither Iran nor Israel looks interested in any further escalation in the unprecedented hostilities of last week, and investors appear eager to get back into risk, paring back holdings of safe haven assets such as bonds, gold and the dollar. That's not to say all has gone quiet. A U.S. base in Syria was the target of a rocket attack on Sunday, ostensibly from Iraq-based Hezbollah fighters.
And beyond the Middle East, the other weights on world stocks - which dragged them to their worst week in more than a year - still linger, namely later Fed rate cuts and caution over chip sector earnings. Evidence of the latter was on display in Japan, with the tech-heavy Nikkei's 0.7% rise lagging a 1.3% jump for the broader Topix.
In a relatively light week for macro data and events, the headliner is the Bank of Japan's policy meeting on Friday, when new inflation forecasts are due, even if economists consider it too soon for another rate hike.
For the United States, the main focus is Friday's PCE deflator, the Fed's preferred consumer price gauge. No Fedspeak will be forthcoming, as we enter the blackout period before next week's policy decision. But the message of late from every Fed official has been the same: no rush to cut.
There has been no end of ECB rhetoric in recent days, coalescing around a June cut.
French central bank chief Francois Villeroy de Galhau said on Sunday that "barring surprises, there is no need to wait much longer" for policy easing, even amid risks from the Middle East. Following June though, reductions should be at a "pragmatic pace."
The comments show the split emerging inside the ECB about the pace of easing. Pierre Wunsch and Madis Muller came out separately on Friday backing multiple cuts this year.
ECB President Christine Lagarde has a chance to weigh in later today when she gives a lecture at Yale.
Key developments that could influence markets on Monday:
- ECB President Christine Lagarde's lecture at Yale
- Euro zone flash consumer confidence (April)
- SAP earnings
Asia
Asian stocks recovered some losses on Monday and bond yields rose as fears of a wider Middle East conflict ebbed, with investors gravitating back towards riskier assets.
Gold and the safe-haven dollar pulled back from near their peaks, and crude oil prices declined as the potential for a major supply disruption waned.
Iran said on Friday that it had no plan to retaliate following an apparent Israeli drone attack within its borders, which in turn followed an unprecedented Iranian missile and drone attack on Israel days before.
MSCI's broadest index of Asia-Pacific shares rose 0.93%, retracing some of the 1.8% drop from Friday, after news of the Israeli strike emerged.
Japan's Nikkei added 0.48%, underperforming the rest of the region due to a high concentration of chip-sector shares, which tracked declines in U.S. peers from Friday. Australia's benchmark gained 0.96% and South Korea's KOSPI climbed 1.04%. Hong Kong's Hang Seng jumped 2.26%, while mainland Chinese blue chips edged up 0.12% in their first chance to react to new measures announced on Friday aimed at promoting overseas investment in China's technology sector.
FTSE 100 technical analysis for today, 22nd April 2024
Well we are starting the week pretty positively so far, with the bulls managing to break above the 7950 level, and a push towards the 7990 resistance level under way already this morning. We have R1 here at 7991 and also the round 8000 so we may well see a bit of profit taking and the bears have a go here for a drop back to the key support at the 7900 area.
Generally looks likely to follow Asia's lead and put in a decent shift for a bull Monday. Above the 8000 level then the 8055 is next up, being R2 and just above the 20d Raff channel top. Incidentally both the Raff channels are heading down now, following the recent declines from 8040. If we do see 8055 then it shows that the bulls are keen to push on past the recent all time highs, and it keeps alive the hopes for that 8300 level before too long.
Support wise, below the 7900 area, then 7870 is the daily pivot and 7886 for the 200ema on the 30m and a level that should hold if seen. 7900 is also the 30m coral now green, and as such with a few key supports here I would like to see this hold.
Not much on the news front today but highlights include BoC's Market Participants Survey, Comments from ECB’s Lagarde & Villeroy, Supply from the US.
The 2h chart has now also gone bullish and has support locked in at the 7846 with the coral here, and also the Hull MA. Should we get that low then a long here is worth a go, but that would be quite a fall for a positive starting Monday so would likely be a news event to let it see that.
The S&P500 is also looking positive to start with and the bulls will be looking to push up to, and ideally past, the 5000 level today. That should open up a test of the 5015 level where we have R1 and the key fib at 5018.
Similar story for the Dax40, with 17856 R1 looking like it might get a reaction, and a drop down to the support at the 17700 area, 17715 is the 30m coral, and 17670 for Hull MA support on the 2h.
So, generally looking like a positive day ahead. Good luck today.
Interested in how to start trading the FTSE 100? Frequently Asked Questions on Spread betting
Recommended Broker for FTSE 100 trading and how to start trading using support and resistance
IC Markets - offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership, Trading Tips, Support and Resistance Levels with Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE 100, DAX40, Gold and S&P 500.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below with just your email address
