Technical analysis for FTSE 100 for 17th January 2024
London's blue-chip FTSE 100 index closed lower on Tuesday, hitting a one-month low, weighed down by a sell-off in precious metal mining shares, while hawkish remarks from central bankers outweighed support from better-than-expected UK wages data. The FTSE 100 dropped 0.5%, while the domestically focussed FTSE 250 index was flat.
Precious metal miners led sectoral declines with a 2.6% fall, as gold prices dipped on a stronger dollar and rise in U.S. Treasury yields amid uncertainty around early interest rate cuts.
Global investors have scaled back expectations of aggressive monetary policy easing following better-than-expected economic data, particularly out of the United States.
European Central Bank officials also warned on Monday it was too early to discuss rate cuts. That countered optimism from data that showed British wages grew at the slowest pace in almost a year, adding to signs of a gradual cooling of inflationary pressure in the labour market.
Shares slumped across Asia, after fresh data redoubled concerns about China’s economy and as investors curbed wagers on Federal Reserve interest rate cuts. Hong Kong’s Hang Seng Index dropped 3%, with the CSI 300 mainland Chinese benchmark down over 1%. The losses came after official figures showed while China reached its 2023 economic goal, the country’s housing slump has worsened and domestic demand remained listless.
Asian equities slumped on Wednesday, led by Chinese stocks after a slew of data pointed to a patchy recovery in the world's second-biggest economy, while the dollar was near a one-month high as traders dialled back bets of early interest rate cuts.
FTSE 100 technical analysis for today, 17th January 2024
The bears are back in the driving seat as we start the year weakly, and undoing the December rally. The bulls struggled to get the 7600 level yesterday and in fact we look more on track for the 7400 support level in the near future.
We are just testing S3 to start with today at 7461, and the FTSE100 is already down 1.2% before it's even opened, which will unsettle things to start with. As such a move below S3 will likely see more weakness during today's session.
There may be an initial bounce at the opening bell for a rise towards the 7500 area, and possibly the S1 at 7519 for a backtest of this. Generally it all looks pretty bearish still, and this week is being quite bearish. Below 7460 is looking pretty negative as that is also a break below the Raff channels as well, and overnight we have powered through the bottom of the 20d.
If we do bounce up towards the 7500 area initially, then 7518 S1 backtest as mentioned. Above that 7553 is the daily pivot and would be the next main level I am looking for, with 7576 R1 above that. Might be a big ask for today though as inflation has just come in slightly above forecasts so lending weight to keeping interest rates as is for the moment.
It's not all negative though as the daily US charts are still bullish, and we are just on a path to test the 25ema supports - am looking for 4720 on the S&P500 for that, and the 16571 level on the Nasdaq as well. It will be interesting to see what happens when it tests this line again and if it holds again. It was the 25ema that we bounced off on 5th Jan at 4680 to get the climb to 4800.
So for today, initial bounce with a drop down to test that key 7400 area is possible.
Good luck today.
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