Technical analysis for FTSE 100 for 18th October 2024
The UK's FTSE 100 closed at a near five-month high on Thursday, as pest control group Rentokil announced an overhaul of its struggling North America business, while investors continued to bet on further policy easing by the Bank of England (BoE).
The blue-chip index rose 0.7% to close at its strongest level since late May, while the domestically focused FTSE 250 index climbed 0.6% to close at a more than two-week high.
The European Central Bank cut rates for the third time this year earlier on Thursday, saying the outlook for the wider euro zone economy was worsening. Meanwhile, data on Wednesday that showed British inflation dropped to the lowest since April 2021 prompted traders to price in a stronger chance of a UK rate cut in November. The spotlight is also shifting from macro factors to the earnings season.
While U.S. and euro zone stock markets are trading near record highs, British stock markets have lagged somewhat, with the midcap index far from its peak hit in 2021.
China is very much the center of attention today, following a barrage of data and remarks from its central bank chief, financial regulator and stats bureau. Unfortunately, though, none of it served to paint a clearer picture of how exactly the world's second-largest economy is positioned and what actually policy makers are doing about it. The economy grew at the slowest pace since early 2023 in the third quarter, although forecast-topping retail sales potentially gave some cause for optimism. At the same time, new home prices tanked at the fastest pace since 2015.
European shares look headed for a softer open, with FTSE and DAX futures both down, although both indexes are currently on course for weekly gains of more than 1%. UK retail sales are the biggest macro event regionally, coming just as sterling recovers from its mid-week inflation shock.
The British currency is down 0.4% for the week, looking much more robust than the euro, which is on track for an almost 1% slide after Thursday ECB rate cut and signals of more coming soon.
Key developments that could influence markets on Friday:
- UK retail sales (Sep)
- US housing starts, building permits (both Sep)
- Fed's Bostic, Kashkari and Waller speak
Asia & Overnight
China stocks rose on Friday as the central bank officially launched a swap facility aimed at boosting the equity market, although shares elsewhere in Asia were mixed in the wake of data confirming a slowdown in the world's second-largest economy.
The dollar hovered close to an 11-week high versus major peers on Friday after robust U.S. economic data allowed for a more patient path of Federal Reserve easing.
The U.S. currency was also supported by recent market contemplation of a potential election victory for Donald Trump, whose proposed tariffs and immigration policies are seen as inflationary. That helped gold push to a new record high.
China's economy expanded 0.9% in the third quarter from the previous quarter, data showed Friday, slightly below expectations for a 1.0% rise. The previous quarter's growth was revised lower to 0.5%. The world's second-largest economy grew 4.6% year-on-year in July-September, beating a 4.5% forecast in a Reuters poll but slowing from 4.7% in the second quarter.
Overnight, data showed U.S. retail sales rose a stronger-than-expected 0.4% last month after an unrevised 0.1% gain in August. A separate report showed initial jobless claims dropped by 19,000 to a seasonally adjusted 241,000 last week.
Crude oil futures inched higher on Friday, supported by a surprise drop in U.S. oil inventories and simmering Middle East tensions, but prices were headed for their biggest weekly loss in more than a month on worries of lower demand. Brent crude futures rose 0.35%, to $74.71 a barrel, while U.S. West Texas Intermediate crude was up 0.45% at $70.99 a barrel.
FTSE 100 technical analysis for today, 18th October 2024
The FTSE100 managed to get to the 8395 resistance level yesterday and with our short there the plan is to run that now. If we get a decent slide down today then I will just trail the stop as usual and am thinking that we may well see a decline down to the 8320 area during trading hours.
Initial resistance for today is at the 8384 level where we have the red 30m coral line and it feels like a short the rallies sort of session to start with. The crucial support is 8350 as we have the Hull MA here, along with the overnight low so the bears will need to break this to test that 8320 level.
Lower down then ultimately the 8250 level is the next major daily support as we have the bottom of the 10d Raff channel here. I don't think we will get that low today though with the war threat still lingering in the background and an escalation of Israel v Iran, it may well lead to profit taking later on, and a decline next week.
I am more inclined to go with the 8320 level holding and the bulls to stage a bit of a fight back from there. if they push past the 8395 level then 8413 is the top of the 20d Raff channel and we also have the R1 here. 8420 is the top of the 10d Raff channel as well, so should we see this 8420 then a short here is also worth a go. We may well see the bears appear here.
It is also option expiry today so expect some volatility at 10:10 this morning as the various futures contracts roll over.
Retail sales rose 0.3% in September 2024, following a rise of 1.0% in August 2024. The ONS said retail sales grew in September as tech stores reported a notable rise in sales. These were only partially offset by a poor month for supermarkets, where retailers said bad weather and households continuing to cut back on luxury food items hit sales.
If the bulls were to break above the 8420 level today then ultimately they will be aiming for the next key round number at 8500, though we have a likely hurdle at 8444 R2 as well. Ahead of a potentially choppy weekend I am more inclined to go with a more bearish sentiment today and a drop down to the 8320 area playing out before a bounce.
Good luck today and have a great weekend.
Interested in how to start trading the FTSE 100? Frequently Asked Questions on Spread betting
Recommended Broker for FTSE 100 trading and how to start trading using support and resistance
IC Markets - offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership, Trading Tips, Support and Resistance Levels with Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE 100, DAX40, Gold and S&P 500.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below with just your email address
