Technical analysis for FTSE 100 for 20th March 2024
The FTSE 100 closed higher on Tuesday led by Unilever which had its strongest day in over a month after a decision to spin off a business unit, though caution prevailed ahead of a domestic inflation print.
The blue-chip FTSE 100 ended 0.2% higher. Unilever rose 3.1% as the consumer goods group plans to spin off its ice cream unit, home to popular brands such as Magnum and Ben & Jerry's, and cut 7,500 jobs.
Investors however refrained from placing big bets ahead of key domestic inflation data on Wednesday, following which the global focus will be on the U.S. Federal Reserve's monetary policy verdict.
Later in the week, the Bank of England's rate decision is also due. Traders widely expect rates to be held at current levels, although the focus will be on clues on the timing of the first rate cut.
The FTSE 100 has underperformed its European and U.S. counterparts so far this year, owing to uncertainty over rate cuts and the lack of exposure to technology stocks, which have led global euphoria around artificial intelligence.
Asia
Asian shares were mixed on Wednesday, wary in case the Federal Reserve flags a slower path of rate cuts later in the day, while the yen plumbed four-month lows on expectations that policy in Japan will be accommodative for a while longer.
European markets are set to open lower, with EUROSTOXX 50 futures down 0.4% and FTSE futures 0.1% lower. Both U.S. futures , were off 0.1%.
Tokyo's Nikkei is closed for a holiday in Japan, but the yen's weakness lifted Nikkei futures 0.4% higher, a day after the Bank of Japan ended years of negative interest rates in a well-telegraphed move.
China's central bank left its benchmark lending rates unchanged on Wednesday, as widely expected.
Rates
With BOJ out of the way, focus is now on the Federal Reserve policy meeting outcome later in the day where the risk is the new economic projections - the dot plot - could signal just two interest rate cuts, down from three, or a later start to the policy easing. Markets have pushed back the timing for the first Fed cut to June, and maybe even July, due to recent data showing inflation has remained sticky.
A slew of European Central Bank officials including Christine Lagarde will be speaking later in the day. Some officials have endorsed June as the likely month to start discussing ECB rate cuts.
FTSE 100 technical analysis for today, 20th March 2024
A decent day yesterday as the bulls defended the 7700 level. We now head into more news with the Fed interest rates today and the BoE tomorrow. UK inflation has just come out and cooled slightly, though rates are likely to remain as they are.
The consumer prices index (CPI) fell to 3.4pc in February, down from 4pc the previous month, according to the Office for National Statistics (ONS).
Initially today we have resistance at the 7756 R1 level and in fact have just spiked to this as the news broke, while above this the 7776 R2 level and 7786 daily resistance is next up. I expect that we may well test this area today and could see the bears have a go here.
Probably see a bit of buy the rumour sell the news ahead of the Fed later, though rates are expected to remain at 5.5%. The news is released at 18:00, followed by the press conference at 18:30 - this may generate some volatility depending on the rhetoric.
Above the 7786 level then 7807 is R3 and ultimately we may well be on for a test of the 7850 area next. Probably not today for that though...
Support wise, the daily pivot at 7725 aligns with the green 30m coral and also the Hull MA on the 2h chart so I would like to see this hold and the bulls to build on yesterday's bullishness.
If it breaks then a slide down to the recent low at 7693 would likely play out. Below that then 7675 is next with a test of the S2 and the bottom of the 20d Raff channel. I don't think we will get this low today though.
The Raff channels continue to head up as the bullish sentiment for March continues, though over in the US, the S&P500 Raffs are heading up whilst the Nasdaq 10d Raff is now heading down as its dropped off from its recent highs.
The Dax40 looks like it will pop above the 18000 level today and more than likely rise to test the 18088 key fib, and with R2 at 18102, we could then see a drop off from here. Certainly a decent place to bank some profit.
Good luck today.
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