Technical analysis for FTSE 100 for 25th September 2023
Asian shares fell on Monday, dragged by China, after central banks last week reinforced the message that interest rates would stay higher for longer, while investors braced for inflation data from the U.S. and Europe.
Chinese stocks were among the hardest hit across broadly lower equity markets in Asia on Monday in a further sign of cautious sentiment. Treasuries crept lower and oil gained for a second day. Equity benchmarks in mainland China and Hong Kong fell with the Hang Seng index tumbling as much as 1.6%. A Bloomberg Intelligence index of Chinese property developers dropped as much as 6.4%, heading for its worst session in nine months.
Markets will be looking for clues on whether China's economy is regaining traction, with a week-long national holiday set to begin on Friday that will be a key test for consumer spending.
S&P on Monday lowered its forecast for China's economic growth in 2023 to 4.8% from 5.2%, saying the fiscal and monetary easing had remained limited.
The big test in the week ahead would be the industrial profit figures on Wednesday from China, as well as manufacturing and services PMIs on Saturday.
Much will depend on U.S. data. In a sign of slowing growth, U.S. business activity was basically at a stand still in September, with the vast services sector essentially idling at the slowest pace since February.
The Fed's favoured inflation gauge, the core Personal Consumption Expenditures Price Index, is expected to show on Thursday a 0.2% monthly increase for August, unchanged from July. Other U.S. data in the week includes final Q2 GDP, and weekly jobless claims.
FTSE 100 technical analysis for today, 25th September 2023
I am thinking that we will see a dip rise dip today and some more weakness to creep in as we near the end of the month. I would still like to see the FTSE100 drop down to test the 25ema on the daily at 7560 now to set up a decent bounce at the start of October.
Initially today we have support at the 7640 level once again, that we climbed off on Friday, though below this then 7605 is the next key level of note. We may well see a drop down to test that today and if we do so then a long here is worth a go. The bounce from Friday has fizzled out at the 7730 level and we are now back below 7700 which will give the bears some momentum and the bulls will have to fight hard today if we are to get a bull Monday. We didn't last week and we may struggle a bit this week too!
With that drop the 2h chart has gone bearish and has resistance at 7685 now. With the daily pivot and also the now red 30m coral also in this area we may see this act as initial resistance and be the point for an early drop.
Above the 7685 level then 7721 is R1 and just below Friday's high at 7735, so should we get this high then a reaction here is likely. 7742 is also the key fib.
With the S&P500 and Dax also looking like a dip and rise potentially, and in fact how the ASX200 played out today, it lends weight to us doing the same. Fear is still around at the moment, which may well lend some weight to a further drop towards that 7560 level.
The Raff channels continue to head up for the FTSE100, and the bottom of the 20d is down at the 7575 level, so tying in with that 25ema as well. The FTSE 100 looks more optimistic than the US and Germany too!
Good luck today and keep an eye out for a test and hold of the 7605 level.
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