Technical analysis for FTSE 100 for 19th June 2024
London's FTSE 100 bounced back on Tuesday, with investors optimistic ahead of key domestic inflation data and the Bank of England's policy decision this week, while strength in Hargreaves Lansdown added to gains.
The blue-chip FTSE 100 closed 0.6% higher at 8,164.21 points, after three straight sessions of losses.
The benchmark has been drifting between the 8,100 and 8,200 levels for the past few weeks, with steeper declines expected if it dips below the 8,100 mark.
Meanwhile, a lesser-than-expected rise in U.S. retail sales revived some hopes of a September rate cut by the Federal Reserve.
Investor focus is now on the domestic consumer price index (CPI) numbers on Wednesday, the last crucial dataset ahead of the BoE's decision on Thursday.
Asia & Overnight
Asian shares rose to a one-month high on Wednesday, buoyed by a rally in tech stocks, while the dollar was steady as soft U.S. retail sales data reinforced expectations of the Federal Reserve cutting rates later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan was 1% higher and on track for a more than 4% gain in June.
The tech stocks in the region rose over 2% to a record high as the rally raged on with AI darling Nvidia dethroning Microsoft to become the world's most valuable company on Tuesday.
Futures indicated that European bourses were set for a more subdued opening, with Eurostoxx 50 futures little changed and FTSE futures down 0.18%.
Investor focus will be on UK inflation data due later in the day that will set the stage for Bank of England (BoE) policy decision on Thursday, with the central bank widely expected to stand pat on rates.
The inflation report is expected to show Britain's inflation rate fell back to the BoE's 2% target in May, from 2.3% in April, while services CPI is expected to come in at an annual 5.5% in May, from April's 5.9%.
In commodities, oil prices steadied, with Brent crude futures up 0.06% at $85.38 a barrel, while U.S. West Texas Intermediate crude was little changed at $81.56 per barrel.
U.S. markets are closed on Wednesday, which will likely result in muted trading throughout the day.
Rate cuts
U.S. retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed on Tuesday, suggesting economic activity remained lacklustre in the second quarter.
The data led to a small boost in rate cut expectations for September with traders pricing in a 67% chance of easing compared with a 61% chance a day earlier, CME FedWatch tool showed. Markets are pricing in 48 basis points of cuts this year.
FTSE 100 technical analysis for today, 19th June 2024
The US markets are closed today which may well lead to a more muted session.
Inflation has fallen back to the Bank of England’s 2pc target for the first time in nearly three years, official figures show, in a boost to Rishi Sunak’s election campaign. The consumer prices index (CPI) fell to 2pc in May, according to the Office for National Statistics, which was down from 2.3pc in April and in line with economist expectations. It marks the first time inflation has been at the Bank of England’s target since July 2021, before the cost-of-living crisis saw inflation shoot up to as high as 11.1pc in October 2022 - which was its highest in 41 years.
The 8210 level remains as key daily resistance and in fact we spiked to that and dropped back on the inflation news. if the bulls were able to push on today and break above that then the 8240 level is the next key area and worth a short as well. 8251 is also then a test of the top of the 10d Raff channel.
The daily EMAs remain bearish and with 8228 showing as resistance on that the bulls may be hard pressed to push too high today, and also with the US closed.
We have UK rate news out tomorrow with no change expected but as mentioned the other day, a possible reduction next month. More likely given inflation is back at the 2% target.
Support wise today we have the 8171 level as S1 and 8160 is the green 2h coral finally locked in. As such I would like to see any dip down to this area hold for a bounce and a concerted move above (and hold) of 8200.
Should the bears break below this then a dip down to the 8140 level would be likely, with the S2 and key fib supports here. I do think that the 8160 level will be strongly defended though and a break above the 8210 is more likely.
The daily Raff channels continue to head down but that 8120 support level has seen some very decent bounces so as long as buying appetite remains for the foreseeable future, we may well see some more upside ahead of the summer. Though there is an election and Tory wipeout looming!
The Dax40 has managed to defend the 18000 level so far but is still looking weak. That said, the 2h chart has finally gone bullish with 18017 locked in as Hull MA support so it will be interesting to see if this holds - worth a brave long too. The resistance level at 18200 may well hold any early tests this morning though.
With the US closed today the S&P500 will be less volatile but keep an eye on the key FTSE100 levels from the table.
Good luck today.
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Good bounce off the 8170 support area. Keep riding it up and see if 8210 breaks