Technical analysis for FTSE 100 for 22nd January 2024
British equities ended Friday mixed, as gains in non-life insurers stocks were offset by a sell-off in automobile and parts shares, while weaker-than-expected retail sales data further tempered expectations over the timeline for rate cuts.
The FTSE 100 was flat, but marked its third weekly decline and the biggest in three months. The domestically focused FTSE 250 index reversed early gains to end the day 0.4% lower, also logging a weekly loss.
Data showed British retailers suffered the biggest drop in sales in almost three years during December, raising the risk that the economy entered a recession in the fourth quarter. Retail sales volumes shrank 3.2% between December and November as people did their Christmas shopping earlier than usual. The numbers were worse than economists' forecast for a 0.5% drop.
Stocks in Asia dropped from session highs as concern over China’s faltering economy dragged down the nation’s equities. A gauge of regional shares more than halved its earlier advance as benchmark indexes in Hong Kong and China fell. China’s commercial lenders kept their benchmark lending rates unchanged Monday, in line with the central bank’s decision last week to refrain from cutting borrowing costs.
Japanese shares led U.S. and European futures higher on Monday as AI hype juiced up the tech sector ahead of a week brimming with central bank meetings, major economic data and corporate earnings.
FTSE 100 technical analysis for today, 22nd January 2024
The US is certainly putting in bullish overtones and starting the week strongly once again, with the S&P500 having risen to the 4850 level to start the week. The Tech sector is proving pretty strong as well, with the Nasdaq making new highs. Meanwhile the FTSE100 is being a bit of a laggard and treading water around the 7500 level.
Initially today it looks like we may in fact get a dip and rise on the FTSE100, and that may also play out on the US markets as well with the bull Monday kicking in later on. Support to start with is a potential double bottom with Fridays low at the 7450 level, and then a test of the key fib at 7433 below that. We also have the Hull MA on the 2h at 7430 to also lend some weight to support here.
As such, should we see a test of the 7430 area then a long here is worth a go and we may well see some buying kick in fairly well for a run back up towards the 7500 level.
That may mimic the US markets with the S&P dropping down to the 4821 level and then bouncing also.
Below 7430 then the 7385 level is the next key support though I am not expecting it to drop that low today.
Onto resistance and above the 7500 level where we have the 30m 200ema to start with, then it would be Fridays high at 7523 to keep an eye on. That also aligns with R1 for today at 7522 so we may well see a bearish reaction here again. Above this the key fib is close at 7536, though ultimately the bulls would be looking to break that and push towards 7550, and then towards the 7600 level.
Looking at the seasonality chart are we seeing the end of Jan pump kicking in a bit early?
So generally thinking a bit of a bullish Monday, and once again buying the dip is the preferred play, ideally at the 7430 area!
Good luck today.
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