Amidst mixed economic data and corporate earnings, the FTSE (LSE: UKX) experienced a marginal increase, closing at 7,931.98, marking a gain of 0.29% for the session and 0.31% for the week. Commodity-linked stocks, particularly in the energy sector, contributed to the index’s modest uptick, while telecommunications firm Spirent Communications saw a notable surge following a deal with Keysight Technologies.
Economically, the UK’s GDP contracted by 0.3% in Q4 2023, aligning with initial estimates, while business investment rebounded by 1.4% in the same period. Despite concerns over a widening current account deficit, the UK stock market hit a 12-month high, indicating overall positive sentiment.
Technical Analysis
The 4-hour chart shows that the FTSE 100 is currently trading at 7,931.98, hovering slightly above a horizontal trading range. The price action sits comfortably above the upward-sloping 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), indicating a bullish bias. The 20-SMA’s position above the 50-SMA and 100-SMA reinforces this positive momentum.
Looking ahead, a potential short-term trading opportunity lies towards the resistance level at 7,974.40, which coincides with the 13-month high. A sustained break above this level would confirm the bullish momentum, potentially paving the way for a test of the all-time high at 8,047.06.
However, the rising RSI (67.52) is nearing overbought territory, suggesting a potential short-term pullback. Should the price action break below the trading range on significant volume, a move towards the 7,784.55 support level could materialize. A decisive break below this level could bring the 7,699.68 and 7,620.41 support levels into play.
Summary
The confirmation of a recession may cause some concern, but the FTSE 100’s resilience and proximity to its all-time high paint a potentially bullish picture. The index is poised for a breakout; a surge above the 13-month high could propel it towards record territory. However, caution is advised as the RSI nears overbought levels.
Sources: TradingView, Trading Economics, Office for National Statistics, Reuters, Morningstar.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
