Technical analysis for FTSE 100 for 31st August 2023
The pound made its largest leap in six weeks amid hopes the US Federal Reserve will not raise interest rates further. Sterling gained 0.9pc after a downward revision to growth in the American economy and weaker than expected jobs figures. Meanwhile, private sector hiring slowed more than expected in August, with companies adding the lowest number of new jobs since March, according to data from payroll firm ADP.
Wall Street edged higher with money markets increasingly shifting bets toward US Federal Reserve holding interest rates where they are at the next meeting in September, at a range of 5.25pc to 5pc.
However, the push in the pound above $1.27 hurt the FTSE 100, where most companies make money in dollars. The FTSE 100 ended up 0.12pc at 7,473.67, after hovering around two-week highs.
Shares in Asia slipped as investors digested the latest batch of economic reports from China, while Treasuries extended a Wednesday rally in a sign of growing anticipation that the Federal Reserve is nearing the end of its tightening cycle.
Equities in Japan rose while those in Hong Kong and mainland China dropped. Manufacturing activity in China contracted less than forecast in August, while the services PMI showed slowing expansion, undershooting expectations. About three stocks declined for every two that advanced on the MSCI Asia-Pacific Index, which was little-changed.
Asian shares were set for the worst month since February, with sentiment hurt by still-gloomy China factory activity, while investors were also cautious ahead of a barrage of U.S. data that could add to bets that interest rates have peaked.
FTSE 100 technical analysis for today, 31st August 2023
The end of August already and the bulls have fought back quite well to end the month fairly strongly. We may well get another attempt to break the 7500 level today and if they manage it then a test of the 7530 R2 and key fib level would be quite likely. That said, 7500 is now 2h resistance as the Hull moving averages have gone bearish after the slightly weaker day yesterday, so adding more resistance here.
Above the 7530 level then 7551 is the daily 200ema and would be the first test of that for a while and with R3 at 7547, would likely see a reaction. As it's the end of the month we may also see a bit of profit taking at the end of the day as well to lock in any gains/profits.
7500 is also the top of the 20d Raff channel, and whilst the daily EMAs remain bearish the bulls will really have to try hard to break though the key resistance levels.
Talking of month end, it my well be worth the small Dax long play at 3pm'ish to hold overnight for the new month money pump. Usually hold till mid morning or so on the 1st of the new month. It's worth keeping an eye on this.
Support wise for the FTSE 100 today, then the 7470 has held well yesterday and overnight, hence thinking that we may well get an initial kick up to start with. Below that then the 7450 area has a couple of decent supports in play, namely S1 and the first test of the green 2h coral so may well hold. A range of 7450 to 7550 would fit pretty well today as well.
Below that then the 7431 level is the key fib and the 30m 200ema, so a level that I would like to see a bounce from if it were to be tested.
On the news front we have the PCE at 13:30 which is the Fed's preferred gauge of inflation. NFP tomorrow too...
So in a nutshell, generally keep an eye on 7500 and 7550 for resistance, 7450 and 7430 for support.
Good luck today.
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