Technical analysis for FTSE 100 for 7th June 2024
British equities closed higher on Thursday, after the European Central Bank delivered a rate cut and commodity prices ticked higher, while declines in companies trading ex-dividend in London markets capped gains.
The blue-chip FTSE 100 closed up 0.5% while the mid-cap FTSE 250 ended 0.2% higher.
The ECB delivered its first rate cut since 2019, trimming its record high deposit rate by 25 basis points. However, it revised its inflation forecast upward, expecting it to average 2.2% in 2025, up from its target 2%.
Investor focus will now shift to the crucial non-farm payrolls (NFP) data due in the United States on Friday, for more clues on the Federal Reserve's stance on monetary policy easing.
Asia & Overnight
Asian stocks are set to snap a two-week losing streak on Friday after major central banks kick-started their rate easing cycle this week, adding to expectations the U.S. Federal Reserve could soon follow suit.
The European Central Bank (ECB) delivered a well-telegraphed rate cut on Thursday, a day after the Bank of Canada became the first G7 nation to trim its key policy rate.
MSCI's broadest index of Asia-Pacific shares outside Japan tracked world stocks higher and rose 0.3% in early Asia trade. The index was headed for a weekly gain of nearly 3%.
Markets are now pricing in roughly 50 basis points of easing from the Fed this year.
Elsewhere, the dollar languished near an eight-week low against a basket of currencies , and was headed for a weekly-loss of about 0.5%.
The euro rose 0.05% to $1.0895, extending its slight gain from the previous session as the ECB raised its inflation forecasts and kept investors in the dark over how soon subsequent rate cuts could come.
In commodities, oil prices eased slightly, with Brent crude futures down 0.09% to $79.80 a barrel while U.S. West Texas Intermediate crude futures dipped 0.1% to $75.48 per barrel.
FTSE 100 technical analysis for today, 7th June 2024
So the ECB have done the first rate cut - leading the way and the reaction on both the markets and inflation will be watched by the others. We now head into NFP at 1330 with a forecasted rise to 185k from 175k previously. Once again, buy the rumour sell the news may well play out.
The 8255 long on the FTSE100 is still running from yesterday and the stop is now at 8270 so continue to run that. The bulls will be keen to break and hold above the 8300 level today, but we are close to the first of the daily resistance levels at 8311 and also R1 here, so this may well be an early barrier.
If that does rebuff the bulls then a drop down towards the daily pivot at 8276, and 8270 30m 200ema would be the first major support level I am looking at. That could then set up a bounce for a push up towards the next daily level of note at the 8340 area, along with the top of the 20d Raff 8354.
A break of 8270 though and then the bears will be looking to halt the current bullish momentum and drop it down towards the 8244 and possibly another test of the 8200 level.
A lot of todays action will depend on NFP news. Also with it being a Friday it can pay to be slightly more cautious today - lower stakes and ease up on the risk.
Above the 8350 level then the next round number at 8400 would be the target though that may be a big ask today ahead of the weekend.
With the strength yesterday and the bounce from the 8200 level continuing, the 10d Raff channel has levelled off a bit now, and if the bulls continue this push we may well see some further upside next week. The 2h chart is now bullish for today as well with 8271 Hull MA support so the bulls will certainly be keen to buy up any drops.
Keep an eye on the levels, NFP at 13:30 and good luck today. Have a great weekend.
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