FTSE 100 technical analysis for 25th August 2023
Asian stocks sold off and the dollar scaled an 11-week peak against major peers on Friday, as investors braced for the risk of a hawkish tilt from Federal Reserve Chair Jerome Powell at Jackson Hole.
Equity markets in Japan, Australia, South Korea and China all slipped with declines prominent in Hong Kong-listed technology stocks, echoing heavy selling in US tech shares on Wednesday. The Nasdaq 100 fell 2.2%, its worst day in three weeks. A drop of more than 1% for the S&P 500 almost wiped out its weekly gain. Futures contracts for the two US benchmarks were little changed in Asian trading.
Nerves ahead of Powell’s speech at the Fed’s annual retreat for global central bankers, including the Bank of Japan’s Kazuo Ueda and European Central Bank’s Christine Lagarde, encouraged traders to cash in on the tech-led rally after chip designer Nvidia’s extremely strong financial results following Wednesday’s closing bell.
The tech-centric Nasdaq slumped 2.2% to lead losses of more than 1% across Wall Street’s three major indexes, and futures indicated a flat start at the reopen.
FTSE 100 technical analysis for today
The bears drove the FTSE100 down from just shy of the daily resistance level at 7395 yesterday and managed a test of the 7310 after hours. That has held overnight and as such we may well get an initial kick up to start with this morning. It's all eyes on Powell and the Jackson Hole speech later, with some clues on his interest rate thinking what traders are hoping for.
Initially today we have resistance at the daily pivot level at 7341, and also the red 30m coral here. However I am more inclined to look for a rise ultimately to test yesterday's high again at the 7385 area, and also note that we have a cluster of resistance levels here with the key fib, and 20d Raff channel top.
The 2h chart remain bullish for the FTSE100 (the only one that currently is) and has Hull MA support at 7319 to start with. Hence expecting an initial bounce. 7281 is the green coral below that so a level that the bears will want to defend should 7310 break.
7287 is also the key fib support for today. Should it get bearish then the bears will be aiming to ultimately test the next daily level at 7250. If the US continues to weaken (and the S&P breaking below 4400 isn't a great sign for the bulls) then that may well help fuel the FTSE100 bears too.
Above 7386 then the 7416 R2 level is the next one, and ultimately 7486 to test the red 30m coral. However, 7432 is the 25ema on the daily that I have mentioned a few times and a reaction here is likely. We might not get that high today but do keep an eye out for it.
Of course todays big event is Powell's speech at 15:05 today, closed following the Michigan Consumer Sentiment figures at 15:00 - forecast to drop slightly to 71.2 from the previous figure of71.6.
We also have a speech from Lagarde at 20:00 this evening.
The other point is that we are closing the week ahead of a long weekend in the UK. As such, risk off appetite later on may well see some profits get banked if we do get near to the 7400 level again, as we have had a decent showing from the bulls this week.
Good luck today and have a great long weekend (no email Monday).
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