Technical analysis for FTSE 100 for 16th February 2024
UK equities gained on Thursday, buoyed by a fall in government bond yields after data showed the British economy fell into a recession at the end of 2023, building the case for the Bank of England to ease its monetary policy.
The exporter-heavy FTSE 100 rose 0.4%, while the mid cap FTSE 250 index added 0.5%.
Britain's economy entered a recession in the second half of 2023 after it shrank by a worse-than-expected 0.3% in the three months to December. It also contracted by 0.1% between July and September.
However, shares were supported by a fall in the 10-year UK gilt yield, which last stood at 4.058%.
Money market traders added to their bets of an interest rate cut from the BoE, with most pricing in about 75 basis points (bps) of cuts this year, up sharply from 60 bps on Tuesday, when strong U.S. inflation data added to expectations that central banks would be slow to cut rates.
Asian stocks advanced across the board, led by gains in Japan after the S&P 500 Index hit another record and as Chinese consumption showed signs of improvement. The Nikkei 225 Stock Average rose as much as 1.9%, inching closer to its historic peak reached in 1989. Tech firms led the gains after US semiconductor equipment manufacturer Applied Materials Inc. gave a bullish revenue forecast.
Japan's Nikkei closed at another 34-year peak on Friday, helped higher by a buoyant Wall Street, while the dollar found its footing after a big fall in U.S. retail sales revived chances of a June rate cut.
The rally in Asia is set to extend to Europe, with EUROSTOXX 50 futures up 0.5%. Nasdaq futures rose 0.2% and S&P 500 futures were flat.
Overnight, data showed the U.S. retail sales fell by 0.8% in January, the sharpest drop in 10 months. Markets moved to fully price in a rate cut from the Federal Reserve in June, reversing some of the price action after a stronger-than-expected U.S. inflation report prompted traders to give up bets for early rate relief.
FTSE 100 technical analysis for today, 16th February 2024
The bulls are continuing to fight back well despite news of war, recessions, no rate cuts and so on! We tested the 7620 level overnight and have broken through so the bulls will be looking to consolidate that move and push higher on any dip today.
Above the 7647 R1 level that has held overnight they will be aiming for the next daily level of note at the 7663 10d Raff, with the possibility of 7722 above that. Might be a big ask for a Friday and is also just above R3. Do bear it in mind though.
Following the bounce yesterday the daily EMAs are now on the cusp of going bullish again (choppy February!) and would lock in the 7600 level as support if they do so. That also ties in with the daily pivot for today so I would like to see any test of this level hold.
Generally today I am looking at a rise towards the 7672 level and of course being Friday it's worth (a) being more cautious and (b) expect some profit taking at the end of the day.
Support wise then we have that 7600 area as mentioned as the main one. if the bears break below that then a test of the Hull MA at 7565 is likely, with 7526 the next major support below that. Generally today I am expecting the bulls to hang in there an will defend the 7600 area if seen.
It's mostly USA news out at 1330 and 1500 today, with the Producer Price Inflation (MoM) at 1330 being the most closely watched, as it may well give some guidance once again on rates. The forecast is a rise to 0.1%.
UK retail sales volumes (quantity bought) rebounded 3.4% in January 2024, following a record fall of 3.3% in December 2023. This was the largest monthly rise since April 2021 and returned volumes to November 2023 levels.
So, generally buy the dip today - have a good session and a great weekend.
Interested in how to start trading the FTSE 100? Frequently Asked Questions on Spread betting
Recommended Broker for FTSE 100 trading and how to start trading using support and resistance
IC Markets - offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership, Trading Tips, Support and Resistance Levels with Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE 100, DAX40, Gold and S&P 500.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below with just your email address
