Technical analysis for FTSE 100 for 3rd January 2024
London stocks started the year on a sombre note, weighed down by losses in the financial sector and as UK government bond yields climbed to two-weeks high. The blue-chip FTSE 100 fell 0.2% on Tuesday, after hitting an over seven-month high earlier in the session, while the mid-cap FTSE 250 index was down 0.9%.
Yields on the benchmark 10-year government bond rose over 15 basis points to 3.695%, touching a more than two-week high, tracking moves in U.S. Treasuries as investors moved away from higher risk assets.
The investment banking and brokerage services index led the losses with a 2.2% fall, closely followed by a 1.9% decline in life insurance stocks.
Britain's manufacturing sector suffered a setback in its recovery efforts as output and employment fell more sharply in December than in the previous month, according to a survey. Another set of data showed prices charged by British store chains rose at the slowest pace in a year and a half in December, an industry group said.
Asian equities, led by Chinese tech stocks, tracked a drop in US shares as Wall Street’s risk-on mood faded with declines in the sector. The dollar mostly held on to its gains. A gauge of Hong Kong tech shares fell over 2%, while equity benchmarks in South Korea and Australia also declined Wednesday after closing at their highest levels since at least mid-2022 in the previous session. Japanese markets remain closed for a holiday.
Asian shares extended a global sell-off on Wednesday, while the dollar held gains, as market optimism about early and aggressive U.S. interest rate cuts ebbed ahead of the release of Fed minutes and jobs data.
FTSE 100 technical analysis for today, 3rd January 2024
Turned into a bear Tuesday with a decent drop off the 7760 level and the brief flirtation below 7700 being defended though fairly poorly so far. We are just hovering around that area to start with today and we may well see a dip and rise again today, with a drop down to the 7645 support area.
We have S2 and the bottom of both the Raff channels in this area so I would expect the bulls to at least attempt to bounce it here, and if they manage to do so a climb back towards 7700 would likely play out.
Initial resistance is at the daily pivot at the 7722 level and we also have the 30m 200ema here, along with it being just above the red 30m coral. As such we may well see the bears try and build on yesterdays weakness and also set a lower high for the week.
Above this then then 7740 (2h coral) and 7770 would be next up with the key fib and splitting R1 and R2, along with a double top with yesterday.
Oil continues to slide which is also weighing on the FTSE100 to start the year off and its also worth being in mind that we usually start the year a bit weaker as the Santa Rally gets unwound (profits banked). For new members here is a link to the seasonality chart which its worth looking at.
Overall the bigger picture trend remains bullish though so significant dips are still likely to be bought up for the time being. With 7650 being the bottom of the Raff channels then I would like to see this hold.
Below 7650 then S3 at 7598 and the 7600 round number would be the next level to look for though I am not expecting it to get that low today. Buying the dips is the preferred play for today.
Looks like we will also see that on the S&P500 and Dax40 with the 4720 and 16600 levels of note respectively as supports.
Good luck today.
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