Technical analysis for FTSE 100 for 18th September 2024
The FTSE 100 rose to a two-week high on Tuesday, lifted by a rise in retailer and personal goods shares, while investors prepared for central bank meetings through the week.
The blue-chip index FTSE 100 rose 0.4%, while the mid-cap FTSE 250 edged up by 0.1%. Both indexes marked their fourth consecutive session of gains.
U.S. stock markets ended nearly flat after hitting record highs on Tuesday and the dollar stood firm as strong economic data allayed slowdown fears and investors braced for the Federal Reserve's expected move to cut interest rates for the first time in more than four years.
Signs of a slowing job market over the summer and more recent media reports had contributed in the past week to betting the Federal Reserve would move more drastically than usual at its meeting on Wednesday and shave off half a percentage point, to head off any weakness.
Data on Tuesday showed U.S. retail sales rose in August and production at factories rebounded. Stronger data could theoretically weaken the case for a more aggressive cut.
Asia & Overnight
The dollar ceded some of its overnight gains on Wednesday while Asian stocks put in a mixed display as traders weighed the odds of a super-sized Federal Reserve interest rate cut later in the day.
The U.S. currency dropped back sharply against the yen, handing back a third of its rally from Tuesday, when unexpectedly robust U.S. retail sales data was taken as weakening the case for aggressive Fed easing.
The euro also advanced, clawing back almost all of the previous day's decline.
The chances of the Fed kicking off its easing cycle with a super-sized cut of 50 basis points (bps) oscillated in Asia, retreating to 63% early in the day from 67% around the same time on Tuesday, according to LSEG data. However, as of 0137 GMT, the odds were back at 65%.
Japanese shares were alone in posting strong gains in the region, with the Nikkei stock average climbing 0.72% to erased Tuesday's 1% slide, as the benchmark index continued to be influenced by the dollar-yen exchange rate.
Mainland Chinese blue chips opened flat after coming back online following a holiday-extended weekend, and Taiwan also returned from a day off to trade 0.35% weaker. Australia's benchmark was little changed.
Crude oil was steady after gaining about $1 a barrel on Wednesday amid escalating tensions around the Middle East.
FTSE 100 technical analysis for today, 18th September 2024
We have the FOMC news today with a forecasted rate cut of 25bps, though there is the possibility of a 50bps - 25 more likely though. That news is out at 19:00, with the press conference after at 1930. As such expect some volatility in the lead up to this.
For the FTSE100, having dropped from the 8352 level yesterday it's held steady around the 8300 area, with the 30m 200ema providing support as expected, at the 8275 level. As such these two levels are the range for today and will need to break one way or the other.
For the bulls there is initial resistance at the 8313 area with the now bearish Hull MA here, and 8310 for the now red 30m coral. 8306 is also the daily pivot to start with so we have a cluster of resistance levels in play here.
If the bulls are able to break above the 8315 to start with then 8352 as mentioned which is now daily resistance and then 8402 still features higher up. The daily chart remains positive with the 10d Raff heading up and bullish EMAs.
On the shorter time frames though then the bears look stronger, and will be aiming to break the 8261 level where we have S1.
8246 is then below that with the key fib here, and then the 8202 as daily support. I think that the 8261 level will be defended and the markets will be thinking that the 25bps cut is most likely. The question will then move onto what the BoE will do tomorrow, though it's widely expected to keep rates on hold at 5%. We may see some cuts in Q4 though as the economy slows down and the ramifications from the October budget filter through.
The Dax slid well from the 18800 level and it was good to catch that move and again, a nice hold of the support from the 30m 200ema at the 18625 level.
So thinking a dip and rise today in an opposite move from yesterday.
Good luck.
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