Technical analysis for FTSE 100 for 19th January 2024
British equities rose on Thursday, supported by a string of upbeat earnings from companies such as Flutter and Ferrexpo, while shares of Watches of Switzerland slumped after a bleak forecast, adding to fears about a luxury sector slowdown. The exporter-heavy FTSE 100 ended 0.2% higher, recovering from a three-day slide.
Meanwhile, the mid-cap FTSE 250 index added 0.4%, its biggest gain in more than a week.
Meanwhile, J.P.Morgan expects the Bank of England to start cutting interest rates in August this year, citing a possible easing in inflation and optimism about a soft landing for the economy.
Asian shares bounced on Friday, buoyed by a rally in global chipmakers, while the yen was set to end the week with heavy losses as investors pared back bets the Bank of Japan would soon abandon its uber-easy policies.
The stock rally is set to spill over to European markets, with EUROSTOXX 50 futures up 0.4%. The tech-heavy Nasdaq 100 futures climbed another 0.3%, after hitting a record high overnight.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rallied 1.0% on Friday, but was still down 2.7% for the week as jitters about the global interest rate outlook dominated.
FTSE 100 technical analysis for today, 19th January 2024
The bulls did indeed fight back yesterday now we have tested the 7400 support level and will once again be looking to build on that. The US markets were also pretty upbeat yesterday, breaking their consecutive declines. Retail sales data for the UK has just been released and shows a sluggish December as most sane people expected, given the cost of living increases and peoples desire for a "leaner" Christmas in 2023.
The markets will latch on that though and now be expecting rate cuts sooner again, though with inflation still high I don't think they will be cutting anytime soon, and not in Q1.
Initially we have a cluster of resistance levels around the 7500 area with R1 and the 30m 200ema here, so the early rise could stall in this area. Given that it's Friday and likely to be slightly weird though it's a good day to lower the risk. Daily resistance is also at 7499.
Above the 7510 level then the bulls will ultimately be aiming for 7550 where we have the top of the 10d Raff channel, and also just below R3 at 7560 for today. With he decent hold of the 7400 level and the usual weak start to the year possibly starting to turn the bulls are back in the driving seat. Should we see the 7550 area then a short here is worth a go though having said that!
Higher up the next key level is at 7598 with daily resistance here.
Support wise, then the 7466 daily pivot is key to start with. We also have the green 30m coral here, so should we test that early on a long here is worth a go.
If the bears do appear though and break below that then ultimately I would be looking for a slide down to the 7420 level for a test of the key fib and just below the daily support at 7426. We also have the 2h Hull MA here so I would like to see that level hold.
Generally it looks like it might want to end the week strongly though so as per yesterday buying the dip is the preferred play for today.
Good luck and have a great weekend.
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