Inflation continues to cool | 7500 7528 7541 resistance | 7427 7400 support

Inflation continues to cool | 7500 7528 7541 resistance | 7427 7400 support

Technical analysis for FTSE 100 for 15th November 2023

The FTSE 100 leapt higher today after Rishi Sunak met his target to halve inflation by the end of the year, boosting hopes for interest rate cuts by the summer. The UK’s benchmark stock index gained 1.1pc shortly after markets opened after price growth dropped to its lowest level in two years. The consumer prices index (CPI) dropped to 4.6pc in October from 6.7pc the previous month, according to the Office for National Statistics (ONS), after a slowdown in the increasing cost of gas and electricity. The Prime Minister had pledged at the start of the year to halve inflation to below 5.4pc by the end of 2023.

The pound jumped yesterday after US inflation fell more sharply than expected last month raising hopes that interest rates in America will begin to fall early next year. The consumer prices index fell to 3.2pc in October, according to the Labor Department, down from 3.7pc the previous month and below predictions of a fall to 3.3pc.

Core inflation, which strips out volatile food and energy prices, fell from 4.1pc to 4pc in its lowest reading for two years.

The data sent the value of the dollar sharply downward, with the pound gaining more than 1.4pc against the global reserve currency to tip over $1.24.

UK and US bond yields fell steeply as markets began pricing in cuts to interest rates next spring, with money markets at one point giving a 0pc chance that US interest rates will be increased at the next meeting of Federal Reserve policymakers in December.

The FTSE 100 rose 0.2pc to 7,440.47. DCC, the Dublin-based energy, healthcare and technology group, was the biggest riser on the index, up by 12.04pc. DCC had reported higher than expected operating profits and upped its dividend. Close behind in the league table of biggest risers was Ocado, which rose 10.1pc. Meanwhile, the FTSE 250 rose 3.47pc to 18,536.13.

FTSE 100 technical analysis for today, 15th November 2023

Some positive news to start the day as British inflation fell sharply in October, admittedly mainly due to falling energy prices. The headline annual figure dropped to 4.6%, from 6.7%, the prior month, the first time below 5% since 2021. The monthly release was flat, a considerable cooling from the 0.5% growth seen in September.

That should lend weight to the strength in the FTSE100 continuing for the time being as the seasonality continues to play out nicely, and a positive November and December are on the cards. Will we add 500 points by year end though and see 8000 again?!

Initial resistance this morning is at the key fib at the 7480 level so we could see a bit of a dip and rise play out from this level, and a hold of the daily pivot at the 7427 level would be good. The bulls will certainly be keen to continue to build on the bounce from the 7320 area earlier this month.

Above 7480 then 7500 is the key level, being the daily coral (red), the round number and also R2 for today. I would expect to see a stutter here if we see 7500 today. Above this then 7520 is the top of the 10d Raff channel and then 7527 for the daily 200ema. It will be worth keeping an eye on this whole area for a bearish reaction.

On the support side of things then the daily pivot looks to be fairly key as mentioned, at 7427. 7416 is also the 30m 200ema. The 2h chart remains bullish and in fact as you can see from the trends table, bulls are in charge. As such, it's still buy the dip territory for the moment. Below 7416 though and the bears will be aiming for 7397 S1, with 7381 below that for the key fib.

The Raff channels on the FTSE100 continue to look positive and the 20 day one has levelled out significantly now, while the 10d heads up still. The key test will be if the bulls can break above the 7530 level.

The US markets rallied strongly yesterday after their data was positive, and the Raffs are both heading up, with more upside to come. 4536 and 4572 are the S&P500 resistance levels to watch today.

On the Dax40 I would like to see the daily pivot hold at 15540 if it were to drop that low,

Good luck today.

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