Technical analysis for FTSE 100 for 20th June 2024
London's FTSE 100 closed higher on Wednesday as investors digested a key inflation report that showed a sluggish decline in services inflation, while industrial miners tracking higher copper prices offset declines.
The blue-chip FTSE 100 closed 0.2% higher, above the crucial 8,200 level for the first time in a week, while the mid-cap FTSE 250 was down 0.1%.
The pound gained 0.1% against the dollar and was last at $1.2723.
Investors grappled with a slower-than-anticipated decline in services price inflation in May, which the BoE believes offers a clearer view of medium-term inflation risks, although headline inflation fell to the BoE's 2% target.
Investors are unanimously seeing a rate cut only in September now. U.S. markets were shut for a public holiday on Wednesday.
Asia & Overnight
Asian stocks took a breather on Thursday, hovering near their highest in two years as traders waited for more U.S. policy clues, while sterling was steady before a Bank of England meeting where rates are expected to remain unchanged.
Apart from the BoE, investors will also watch for central bank decisions from Switzerland and Norway on Thursday to set the tone for a global rates outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed at 572.42, just below the two-year high of 573.38 it touched on Wednesday boosted by tech stocks. The index is on course for a 4% rise in June.
European stock markets were due for a higher open, with Eurostoxx 50 futures and FTSE futures 0.2% higher ahead of the slew of central bank decisions.
Data on Wednesday showed British inflation returned to its 2% target for the first time in nearly three years in May, but strong underlying price pressures all but rule out an interest rate cut ahead of election next month.
Most economists in a Reuters poll last week thought the central bank would start to cut rates in August, but markets see only a 30% chance of an August rate cut and think a first move is more likely in September or November. Markets have priced in 43 basis points of easing from BoE this year.
In Asia, Japan's Nikkei was 0.10% higher, while stocks in China and Hong Kong fell, weighed down by lacklustre property shares, as Beijing left its key benchmark lending rates unchanged despite recent data showing the economy remains wobbly.
U.S. markets were closed on Wednesday, with tech heavy Nasdaq futures up 0.5% on Thursday. In commodities, oil prices were mixed, with Brent steady at $85.12 per barrel, while U.S. West Texas Intermediate crude for June was 0.23% lower at $81.38 per barrel.
FTSE 100 technical analysis for today, 20th June 2024
Great bounce off the 8170 support yesterday and 8210 remained as the resistance all day but has broken overnight to see a test the 8227 level. As such we may well see a drop back this morning towards the daily pivot at the 8190 level.
The bulls will be keen to defend any drops, and also the 8200 round number. However, we have the BoE rate news at 12:30 though expected to remain unchanged this time around.... even though inflation is finally back at 2%.
With the daily pivot and the 30m 200ema also at the 8190 level I would like to see this hold and a bit more upside today ahead of a sell off tomorrow as we have triple witching expiry (that's at 10am) and usually results in volatility. As such, the bulls may well be keen to squeeze a bit more out of their trades before that.
The US also returns from the public holiday and already starting optimistically with the prices above R3 to start with. The support/resistance levels do get a bit distorted after a holiday but a dip and rise would make sense on both the S&P500 and Nasdaq.
With the FTSE100 at 8220 as I write this, we may well get that rise towards the 8242 key fib level today. Above that then the 8269 R3 is the next one to look for, along with 8260 being the top of the 20d Raff channel. The Raff channels do continue to head downwards though so the bulls really need to break above the daily resistance levels to keep the momentum going. As per yesterday the 2h chart remains bullish and the bounce off the 8170 level continues - keep trailing the stop on the long from there.
If the bears appear then 8190 is the level they need to break and that would then likely see a drop down to the green coral on the 2h at 8170, and then 8142 S2 level. It will be interesting to see what the USA does today but a dip and rise looks likely on that and the overnight strength continues.
Good luck today.
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