Technical analysis for FTSE 100 for 8th May 2024
The UK's FTSE 100 notched a record closing high on Tuesday in a broad rally as traders returned from a long weekend to price in more interest rate cuts from the Bank of England ahead of its policy meeting later in the week.
The blue-chip FTSE 100 index breached the 8,300 mark to hit a record high of 8,335.68 points and finished 1.2% higher. It was the 11th time the index has ended higher in the last 14 sessions.
The exporter-heavy FTSE 100 stocks also got a boost from a weaker sterling, as investors priced in two Bank of England (BoE) rate cuts this year, with the first likely in August.
Traders expects the BoE to keep interest rates unchanged on Thursday.
Adding to Tuesday's upbeat mood, a survey showed British construction companies enjoyed their fastest expansion in more than a year last month.
Asia & overnight
Asian stocks lacked direction on Wednesday, while the dollar remained firm despite lower U.S. Treasury yields as markets assessed mixed signals from U.S. policymakers and economic data on the path for Federal Reserve interest rates.
Crude oil hovered near two-month lows amid signs of easing supply pressure and continued hopes for a Middle East ceasefire.
U.S. stock futures were flat.
On Tuesday, Minneapolis Fed President Neel Kashkari suggested the U.S. central bank may need to forgo interest rate cuts this year due to stubborn inflation. Last week, Fed Chair Jerome Powell said the wait to loosen policy is taking longer than anticipated, but signalled his inclination is still to cut. And while prices have been sticky, the labour market showed some signs of weakening in the monthly payrolls data from Friday. Consumer price data in a week from now will be closely watched.
FTSE 100 technical analysis for today, 8th May 2024
Despite a fairly lacklustre session yesterday the bulls defended the 8300 level and we are looking at an 8330 open this morning. Overnight we tested the 8350 level so that is the new line in the sand and once again we may well see a double top with the overnight high and then a drop back. That level also coincides with the R1 level to start with so we may well see the bears have a go here.
Above 8350 then the 8400 will still be a bit of a magnet, being the next key round number, though either side of that we have R2 at 8376 and R3 at 8415. The US markets are consolidating a bit at the moment, and the S&P500 didn't move much yesterday. We also have the BoE tomorrow with interest rates highly likely to remain unchanged.
With the key fib for today at 8371 and just below that R2 level we may well top out here, despite the bullish backdrop that remains.
The 2h and daily charts are still looking pretty positive and the former has good support at 8320 from the Hull MA which is as yet untested since going bullish. Lower down the green coral has support at the 8275 level would the bears manage to get the price below the 8315 level.
Initial support though is at the daily pivot at the 8313 level so I would like to see this hold this morning. The Raff channels also continue to head up fairly steeply.
No major economic news to stir things up today, so traders may well just keep their powder dry ahead of the BoE tomorrow.
Lower support is at the 8255 level where we have the key fib and the 30m 200ema. 8250 is also S2 so should it get bearish and drop to this area then we could see a bounce here.
Good luck today.
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