Technical analysis for FTSE 100 for 20th December 2023
London stocks rose on Tuesday, boosted by gains in precious and industrial metal miners that tracked higher commodity prices, and persisting hopes of interest rate cuts from the U.S. Federal Reserve. The blue-chip FTSE 100 gained 0.3%, while the FTSE 250 midcap index added 0.5%.
Precious metal miners topped the charts to gain 2.1% after gold prices advanced as the U.S. dollar and Treasury yields slipped, while industrial metal miners rose 1.3% after copper prices climbed on tightening supplies.
Bank of England Deputy Governor Sarah Breeden said she had no pre-determined path for interest rates in mind but that it would be important for policy to stay at restrictive levels to keep inflation pressure in check.
Focus will remain on economic data, leading with the UK and U.S. inflation prints this week. Data on Wednesday is expected to show headline inflation in Britain running at 4.4% year-on-year in November against last month's reading of 4.6%.
Stocks in Asia rose along with Treasuries as traders shrugged off warnings from policymakers seeking to rein in expectations for US interest-rate cuts. Benchmarks across the region advanced following a rally on Wall Street Tuesday, while gauges in China edged lower. Treasury 10-year yields slipped two basis points to 3.91%. European equity futures edged higher as contracts for US stocks traded flat.
Asian shares tracked Wall Street higher on Wednesday as U.S. rate cut fever lingered, while oil held on to gains from the past two days after Houthi militants' attacks on ships in the Red Sea disrupted maritime trade.
The yen nursed losses near a one-week trough and Japanese yields extended declines after the Bank of Japan held policy steady and gave no sign of when it might end negative interest rates, further aiding risk appetite.
FTSE 100 technical analysis for today, 20th December 2023
The long from 7606 yesterday is still running and looking good this morning with the positive news about inflation falling further than forecast (3.9%) helping the bulls to test and try and break the 7700 level. If they manage to break this then we should see a test of the R3 lev el at 7725 and also a double top with the recent high here. Will we manage the 8000 year end?
So initially today it looks like we will get a pop higher, and the initial resistance is at 7692, but as I am writing this we have just broken above with that news. As such that brings the 7725 level into play to start with. Above this then the 7782 level is next up with the top of the 20d Raff channel here. If we were to see this today then a short here is worth a go. The top of the 10d Raff channel is also not far away at that point being 7783.
Higher still then the next daily level of note is 7801 and then we will start to look more positive for another test of the 8000 area and a big V sign for 2023 on the chart!
Support wise, the 7640 looks pretty key with the daily pivot here, though now we are breaking 7700 the sentiment may well remain bullish and we don't get that low today. 7640 is also the 2h Hull MA support so I would expect this level to hold if seen.
7700 may hold as early support now, if we do get a drop back at the open as well.
Generally this week we should remain bullish as the Santa Rally sentiment continues and it will be interesting to see if we do close the year near to the 8000 level. The long term charts show a potential for 8500+ at some point too!
Generally today then continue in a similar vein and buy the dips. Watch for 7700 and 7640 now.
Good luck today!
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