Technical analysis for FTSE 100 for 21st June 2024
London's blue-chip stock hit a near two-week high on Thursday, as the Bank of England kept rates on hold as expected, with traders raising the prospects of a rate cut after policymakers' comments. The FTSE 100 logged its third straight day of gains, ending 0.8% higher. A 0.4% dip in the pound aided the exporter-heavy index's rise as dollar-earning firms' profits are boosted by a weaker sterling.
London's FTSE 100 share index was steady just below record highs hit in May on Thursday. Sterling slipped 0.2% to around 84.58 percent per euro, but held near its strongest levels since 2022
Two-year gilt yields dropped to their lowest since March after the BoE's decision, LSEG data showed. UK bonds, which have outperformed U.S. and euro zone government bonds this month, rallied as the BoE said that the outlook for rate cuts was "finely balanced."
Traders upped bets for a Bank of England rate cut in August, helping to underpin a pre-election rally for UK stocks and government bonds even though the central bank left rates on hold at a 16-year high on Thursday.
After the BoE delivered its widely expected decision it hinted that it was edging closer to cuts, prompting money markets to place a 44% probability on a move in August, up from around 32% a day earlier. They priced in a 90% chance of a September cut.
Wednesday's data showing UK inflation has dropped to the BoE's 2% target have encouraged those bets.
Asia & Overnight
Asian shares are ending the week with a whimper after a rally to 26-month highs earlier this week drew profit-taking, while the strength in the U.S. dollar as central banks in Europe cut rates kept pressuring the yen towards the intervention zone.
Overnight, the Swiss National Bank cut rates for a second time while the Bank of England opened the door to an easing in August after holding rates steady. Sterling, the Swiss franc and the euro fell, lifting the dollar broadly.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6% on Friday, dragged lower by a pull-back in technology shares, tracking a mixed session on Wall Street overnight.
The index is set for a weekly gain of 1% after rising to its highest since April 2022 on Wednesday as a recent run of soft U.S. data reinforced bets of two rate cuts from the Federal Reserve later this year.
Japan's Nikkei rose 0.1% and the yen eased another 0.1% to trade at 159.01, its softest since late April when the Japanese authorities intervened in the market to stem the currency's fast declines.
Oil prices consolidated on Friday after hitting seven-week highs earlier in the week. Brent futures slipped 0.1% to $85.59 a barrel while U.S. crude also dipped 0.1% to $81.19 a barrel.
FTSE 100 technical analysis for today, 21st June 2024
It's triple witching today which means various futures contracts expire/roll over so expect some volatility around 10am. As such we may well see the FTSE100 put in some moves to test the 8317 resistance and also the 8220 support today. It feels like the bulls will want to end the week strongly, especially as they have now managed to pull it away from the 8200 level.
The US markets dropped off a fair bit yesterday but the S&P500 has fought back well from the 5455 level and may well see some more recovery today. The Raff channels continue to head up and the bottom of the 10d is just below where we are as I write, at 5462.
For the FTSE100 the 8317 resistance level looks to be fairly key for today and as such a drop off from here ahead of the weekend would make sense. We finally have the 10d Raff channel swinging to an uptrend as well having climbed from the 8120 level this week and with the top of that channel also at this 8320 area then it will also be capping progress for the bulls.
Above 8320 then R2 at 8348 would be next up along with 8360 as daily resistance above that. It may be next week to see that higher level though.
Support wise then the daily pivot is first up at 8257, but if the bears have a go then a drop down towards 8220 looks likely. We have a cluster of supports here with 8226 S1, 8218 as the 30m 200ema and the key fib a bit lower at the 8206 level. Along with the round number 8200 and the bulls ideally wanting to keep the momentum going, I am thinking that any dip may well get bought up today.
Not too much more to say really apart from have a good session today and have a good weekend!
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