FTSE 100 technical analysis for 2nd August 2023
Fitch downgrades US from AAA to AA+
Fitch downgrades US from AAA to AA+ - Britain is heading for an industrial recession as interest rate rises hammer factories, bosses have warned. Higher borrowing costs are sending the manufacturing sector into a tailspin, crushing output and employment in an already-struggling sector according to the purchasing managers’ index (PMI). The influential survey from S&P Global shows manufacturing activity dropped last month at the steepest pace so far this year.
Asia stocks fell as Fitch Ratings’ downgrade of the US sovereign rating soured risk sentiment following a strong recent run, while further support measures from China failed to reverse the mood.
An Asia Pacific equity gauge headed for the biggest decline in almost a month. Equities in Hong Kong and mainland China extended losses, while Japanese stocks dropped as a stronger yen dented the outlook for corporate profit.
FTSE 100 technical analysis after Fitch downgrades US from AAA to AA+
Well the bulls failed to break the 7710 level yesterday and we have sold of steadily since with a couple of half hearted bounces off the 2 main supports at 7685 and 7650 on the way down. The next key support that is about to be tested as I write this is at 7610, and we may well see a bounce off this to start with.
Fitch downgrades US from AAA to AA+ and is weighing on markets for a more bearish start to August, and if we dip through 7610 then the 25ema on the daily at 7580 is next up. We also have the daily 200ema here, so should we see that level today then I would also try a long there.
The S&P defended its spike down to the 4545 level on the news last night and managed a bit of a bounce. Ergo that level is the line in the sand that the bulls will be trying to defend on that, 4542 is also S1 and the 10d Raff channel bottom. If the US bulls do stage a fight back then that will help pull the FTSE 100 up as well.
We had the bear Tuesday, Wednesday can be a bit hit and miss and then a bit more bull on Thursday and Friday - will we repeat this pattern this week..... We are also into the summer chop season. August is traditionally weak and choppy, see here
Below the 7580 level then the bears will be aiming for the 7481 level where we have the daily coral line, and is also the 50% fib level of the move from 7225 to 7725. Talking of fibs, 7602 is the 23.6% line of that move as well, with 7412 the 61.8% line. Levels to watch!
Should the bulls have a go today then the first main resistance level is the daily pivot at the 7665 area and we also have the 30m coral and the 200ema here - so likely to be fairly strong resistance. That would also be a test of the now bearish Hull MA on the 2h chart so a short at this area should in theory work well.
Good luck today.
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