Technical analysis for FTSE 100 for 16th January 2024
The UK's FTSE 100 fell on Monday, hurt by a sell-off in luxury and bank stocks, while lacklustre corporate earnings forecasts weighed on the FTSE 250 shares. The blue-chip FTSE 100 slid 0.4%, while the midcap FTSE 250 index was flat at the close.
Investors are awaiting British consumer price inflation data and retail sales figures for December, both of which are due later this week, for more clarity on the timing of expected interest rate cuts. The Bank of England seems to be a relatively hawkish outlier compared to the Federal Reserve and the European Central Bank as they have stuck to their higher-for-longer policy rhetoric.
Across the Atlantic, investors will closely monitor U.S. business activity data for January and December retail sales.
The US dollar climbed to a one-month high as Treasury yields rose and Asia equities declined after hawkish European Central Bank comments pushed back against bets on early and extensive rate cuts.
The MSCI Asia Pacific Index slid 1.2%, the first decline in four sessions, with Hang Seng Index set for the worst day in three months as property-sector funding plans hurt bank shares. European stock-index futures fell, extending a decline in the prior session, while US futures also traded in the red.
Asian shares dropped to a one-month low, U.S. stock futures fell and the dollar rose on Tuesday as hawkish remarks from central bankers tempered expectations for interest rate cuts and traders waited to hear from the Fed's influential Christopher Waller.
FTSE 100 technical analysis for today, 16th January 2024
With all the geopolitical tension currently the bulls failed to pull a bull Monday out of the bag yesterday and as the US was closed, there wasn't much risk on attitude. We may well see a rise and dip today though and the US market attempt to pull things up later later on.
Initial support today is at the S1 level at 7561, and then the key fib just below this at the 7548 level. Ultimately we may well see a test of the bottom of the Raff channels today, both of which are around the 7525 level. If we were to test that then we may see a small bounce here.
Given the bearishness yesterday the 2h chart is now negative as you would expect and we have Hull MA resistance from that at 7590. That is the level that the bulls will need to break above today, but then above this we haver the 30m 200ema and the R1 at the 7627 area.
Above that 7640 would double top with yesterdays high but given how bearish the various 2h charts look I would be surprised if we see such strength. Coupled with a bear Tuesday!
Below the 7520 support area then 7495 is S3 and the bulls would obviously be trying to defend the 7500 round number as well.
As I am writing this the unemployment rate data is out and has remained steady at 4.2%.
For the first time in a while the daily moving averages I watch have gone bearish, cementing the weak start to the year (par for the course though if you look at the sentimentality chart) and 7635 is now locked in as key resistance. Therefore should we see that area any time soon a short here is worth a go.
Not too much more to say really, good luck today!
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