Technical analysis for FTSE 100 for 11th December 2023
The FTSE 100 closed at a seven-week high on Friday with a rebound in crude prices lifting shares of oil majors, though Anglo American (JO:AGLJ) slumped after the miner said it would slash capital expenditure in the face of weak demand. The London-listed stock of Anglo American sank 19% to touch a three-year low and was the biggest decliner among the FTSE 100 stocks.
The blue-chip FTSE 100 closed up 0.5% and recorded its second consecutive week of gains. Heavyweight energy stocks jumped 1.6% after Saudi Arabia and Russia called for more OPEC+ members to join output cuts, driving up crude oil prices.
The focus this week shifts to a slew of central bank meetings, with investors awaiting key decisions from the Federal Reserve, the Bank of England (BoE) and the European Central Bank (ECB).
Asian shares drifted lower on Monday in a week packed with a quintet of rich world central bank meetings and data on U.S. inflation that could make or break market hopes for an early and rapid-fire round of rate cuts next year.
An upbeat payrolls report has already seen investors scale back expectations for a March cut by the Federal Reserve, though May remains priced at a 76% chance.
The Fed is considered certain to hold rates at 5.25-5.50% this week, putting the focus on the so-called dot plots for rates and Chair Jerome Powell's press conference.
FTSE 100 technical analysis for today, 11th December 2023
A decent show from the bulls on Friday that may well continue into this week and a rise towards the 7625 level looks to be on the cards. Possibly even today if we keep the momentum and get a bull Monday.
Initially we have resistance at the 7594 level with R1 and the key fib here, so we may well see any early strength stall here initially. The 2h chart remains bullish for the moment as well and having defended the Hull MA on Friday as the 7510 level that support has risen to 7535.
The daily chart also remains bullish with the Raff channels heading up (as are both the S&P500 ones now) and with the top of the 20d Raff at the 7630 area that also lends weight to that level.
The focus this week shifts to a slew of central bank meetings, with investors awaiting key decisions from the Federal Reserve, the Bank of England (BoE) and the European Central Bank (ECB).
On the support side, 7551 is the daily pivot which may hold initially with a possible overshoot to the test the Hull MA again at 7535. Below that then 7520 would likely be seen as we have the 30m 200ema and S1 level both here. That is also just above Friday's low so a bounce here and a short term double bottom would make sense.
However, if the bears regain control then a break of this will likely see a slide to test the 5482 level which is the next daily support lower down.
That said, the bulls closing out Friday strongly bodes well for more upside this month and a Santa Rally to kick in probably next week.
Markets enter the new week with serious risk-on momentum, having seen US equities finishing the last 6 weeks with gains, but ahead we have a massive week in data that could put that narrative to the test.
A lot of this positivity in risk assets has come on the back or markets pricing in dovish pivots from the Fed and other major central banks and with the Federal Reserve, European Central Bank and Bank of England all delivering rate decisions this week we’ll be finding out if the central banks agree with this or push back.
All three banks are expected to hold rates, so it will be the forward guidance that will move the markets with the Fed also due to release an updated Summary of Economic Projections, which includes its much discussed “dot plot”. Traders will also be watching for any clues from both the BoE and ECB statements and pressers for talks of pushback against dovish market expectation in regard to future rate cuts, or not. Adding to mix we also US CPI and PPI readings, European manufacturing and PMIs and UK GDP figures among other news releases to keep traders busy.
Good luck today.
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