Technical analysis for FTSE 100 for 23rd January 2024
UK stocks climbed on Monday after a record-setting rally on Wall Street helped outweigh concerns about a slowing British economy and sticky inflation, while homebuilders advanced with Persimmon (LON:PSN) leading the outperformance in the sector. The blue-chip FTSE 100 rose 0.4%, while the midcap index FTSE 250 jumped 1.1% to log its best day in a month.
Both the UK indexes marked their third consecutive weekly declines on Friday after a stronger-than-expected inflation reading and slump in December retail sales raised concerns about a potential recession and complicated the outlook for interest rates. A Reuters poll found that it is a close call whether the Bank of England starts trimming borrowing costs next quarter or in July-September, with only a slim majority of economists expecting it to do so before July as inflation falls towards its target.
Meanwhile, Wall Street's benchmark S&P 500 hit a record high in yet another session, extending a bull-market run into a new week.
Asian shares mostly advanced, with Chinese stocks losing steam following an earlier rally on news of a fresh market rescue package. The yen and Japanese stocks fluctuated after the Bank of Japan stood pat on policy. A gauge of Chinese firms listed in Hong Kong pared its gains to 2.7% after climbing as much as 3.8%. Authorities are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore, according to people familiar with the matter.
Japanese shares surged to fresh 34-year highs as the Bank of Japan stood pat on ultra-loose monetary policy, while Chinese stocks struggled as speculation of a huge rescue package from Beijing underwhelmed investors worried about the shaky economy.
FTSE 100 technical analysis for today, 23rd January 2024
The FTSE100 bulls are hanging in there while the US markets continue to push on, with the S&P500 setting a new all time high yesterday. Worm will turn soon though! We may well have a bit of a bear Tuesday later on today so shorting the rallies could be the play today in a change to our usual stance for the past few sessions.
Initial resistance is at the 7520 level where we have R1 and the first fib level. Above that then the 7540 level looks stronger so a short here is worth a go. R2, the key fib, and the daily 200ema are all in this area. The daily chart moving averages are still bearish and the rise towards a test of the main one at the 7584 level looks to be playing out. It will be interesting to see if the bears appear at this line and it's certainly lagging the USA exuberance for the moment. Keeping the powder dry or front running.....
The bulls will be keen to defend the 7500 level though, and if we get a small move below that to test the 7485 support level we may well see them defend this. 7485 is decent support for today, with the daily pivot here, and also just below the now green 30m coral.
Lower down the 2h chart has support at the 7450 level with the green coral and Hull MA both here. Should we get that low then a bounce here may well materialise.
That said it looks like it may well have a bit of strength today but we have earnings continuing, with Tesla the next main one. US markets have some more upside potential for the moment as well by the look of it. Todays results to watch are from Netflix after the bell.
Above the 7585 level then I am still looking at the potential test of the 7615 level though I am not expecting that today, and I do think that we will get a reaction at the 7585 first. How much of a reaction remains to be seen though!
Good luck today.
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