FTSE 100 Technical Analysis

Tuesday, 19th November 2019 13:48 - by Rajan Dhall

The FTSE 100 has moved sharply to the upside today and is currently 1.17% higher.

Yesterday, Fox Business reported that the US will extend its licenses, which allow firms to continue doing business with Huawei for another 90 days. This was obviously positive for sentiment but in the last two sessions, we have seen some GBP strength which usually counters strength in FTSE 100 stocks as most of their profits are denominated in dollars. Today GBP/USD has pulled back which could have helped the rally but it is holding at relatively high levels. Also, there have been hopes that China will add some stimulus to the markets this week after on Monday the PBoC stated it will “increase counter-cyclical adjustment” to ward off downward pressures on the economy. They also added that monetary policy will “properly handle the short-term pressure,” making sure not to offer excessive funding, while keeping an eye on the risk of expectations that inflation may spread.

On the technical front, the daily chart below is showing signs of positivity. Dont get too excited as the break of the trendline is key and beyond that 7439.6 would need to be broken to confirm the trend higher. On a short term basis, the chart is making higher highs and higher lows but the next wave high (7439.6) looks like a good resistance. On the downside, support holds at 7285 and if we do break south before hitting the 7439.6 it would make a lower high lower low.  Either way, a break to the upside seems more likely at this point keep an eye on resistance levels above price as they are in focus.

Keeping an eye on global indices, The FTSE 100 is still lagging behind the S&P 500 (Blue) and the DAX (Orange). Since the ECB announced the latest round of QE and the Fed added "not so QE" the pair have both accelerated to the upside. The UK is falling behind as the political situation remains fragile. Once the situation is resolved both leading parties are offering a serious amount of fiscal stimulus and the Bank of England could also support the economy with an accommodative stance. So the FTSE 100 could have some major long term potential.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.