Technical analysis for FTSE 100 for 5th January 2024
The FTSE 100 rebounded on Thursday after a weak start to the new year as Next shares touched a record high after the clothing retailer upgraded its earnings outlook and helped outweigh a slump in JD Sports following its profit warning. The blue-chip FTSE 100 rose 0.5% after two straight days of losses when traders across the globe unwound their bets on aggressive monetary easing this year.
Shares in Asia were mixed Friday after selling pressure weakened US stocks and bonds as robust signals from the labor market weighed on expectations for interest-rate cuts. Shares in Japan rose, helped along by yen weakness, with China’s CSI 300 Index in the green for the first time this week. Equities in South Korea and Hong Kong slipped and those in Australia fluctuated. Those moves followed a fourth day of loss for the S&P 500 on Thursday while Nasdaq 100 dropped for a fifth day — its worst showing since December 2022. The declines pushed a gauge of global equities down for a third day.
While expectations of rate cuts drove double-digit gains in most U.S. and European stock indexes last year, UK equities posted only marginal gains as concerns over domestic economic growth and rising interest rates lingered. The final S&P Global/CIPS UK Services Purchasing Managers' Index (PMI) showed Britain's economy ended 2023 on a stronger footing than previously thought, easing concerns of a recession.
A separate survey by the British Chambers of Commerce showed companies were a bit more optimistic about sales growth this year after a largely flat 2023, although they remained wary about increasing investment.
Asian markets must wait over the weekend to trade on U.S. December employment data, the first globally significant economic release of 2024 that comes out after they close on Friday.
FTSE 100 technical analysis for today, 5th January 2024
Today's big event is of course NFP at 13:30 with 150k forecasted. Today can be a day to be a bit more cautious and risk off as NFP Fridays can be a bit odd, plus we have had a good week so don't want to ruin it!
Initially today we may well get a small rise to retest the 7700 level once again and with the daily pivot and the now red 30m coral here, it would be a good level for the bears to have an initial crack. If we get a reaction there then a drop down to once again retest the 7650 level would be more than likely, and this level would try to be defended by the bulls. We rose well off this earlier in the week and with S2, the bottom of the Raff channels and the 25ema on the daily here it would make sense for it to hold.
Above the 7700 level then the next key level is 7732 where we have the daily resistance for today, with the 7760 level above that - R2 and also the next higher daily level of note. We may well see the 7730 if the bulls break 7700, 7760 might be a big ask but with NFP out it's certainly possible.
Support wise, below the 7650 level then 7615 is the next key daily support and with S3 here it will need to be defended strongly. A break of this and moving below 7600, would test that 7570 area which is fairly key if the bulls are going to keep the bullish momentum going. I don't see us getting that low today though and a drop to 7650 would probably get bought up as it would be a decent weekly double bottom there.
Good luck today and have a great weekend.
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