Technical analysis for FTSE 100 for 9th May 2024
The UK's FTSE 100 benchmark stock index scaled new highs on Wednesday following upbeat corporate updates while investors awaited the Bank of England's interest rate verdict.
The blue-chip FTSE 100 ended the session up 0.5%, notching a record high of 8354 points.
The index was also supported by a weaker pound, which slipped against the dollar as expectations of a dovish hold from the BoE at Thursday's monetary policy meeting weighed on the currency.
Money markets are fully pricing in a 25-basis-point rate cut in August, and attach a 40% chance of such a move in June as dovish bets have risen recently following a slowdown in British inflation.
Asia
Asian shares steadied on Thursday after solid Chinese trade data added to signs domestic demand in the world's second-largest economy is picking up, while the yen stabilised after three days of declines as Japan talked up potential currency interventions.
Later in the day, the Bank of England (BoE) will decide its interest rate policy, with all eyes on the prospects of a June rate cut following the overnight move by Sweden's Riksbank to cut rates, which underlined Europe's divergence from the U.S. Federal Reserve.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1%, hovering not far from a 15-month high hit earlier in the week after Fed Chair Jerome Powell reiterated a stance for policy easing later this year.
Investors will be focusing on the U.S. consumer inflation data for April due next Wednesday after three straight prints of upside surprises for a better sense of the direction of the Fed's policy
FTSE 100 technical analysis for today, 9th May 2024
A fairly tight range again yesterday ahead of the BoE interest rate decision today with rates expected to remain unchanged. Initially today we have support at the daily pivot at 8348 and if this holds the first test we may well see a rise towards the resistance level at 8388. Buy the rumour sell the news ahead of the BoE would make sense today and the bulls continue to be keen to push for new highs as the FTSE100 continues to play catch up with the rest of the world. One benefit of not having any tech companies in the index!
Below the daily pivot then the bears will be looking to S1 at 8331, and then the 8300 round number below that. The 2h chart has weakened overnight following the lacklustre performance yesterday and has 8365 as resistance from the Hull MA though the bears haven't been particularly convincing so far. Whilst the Hull MA's are bearish, the green coral remains untested and support from that is at the 8320 level - if we see this then I would like to see a bounce here, as its also just below that S1 level.
Below 8320 then 8309 is S2, with S3 fairly close at 8291. As the bulls will be keen to defend the 8300 round number and it splits these two supports we may well see any drop this low materialise into a bounce.
Resistance wise, R1 at 8371 has held overnight but above this and looking distinctly possible for a test today is 8388 R2. We may well get an overshoot of this as the bulls try for the 8400 round number and with 8405 as the key fib for today it should then see a reaction.
If the BoE news drives the bulls even further and above 8410 R3, the top of the 10d Raff channel at 8460 comes into view. I think that's unlikely today though as we are just tracking the middle of both the Raff channels currently, whilst they continue to head upwards.
So, watch out for BoE at midday and let's see I we get a rise and dip play out.
Good luck today.
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