Technical Analyst, Saxo Bank Group
Summary: FTSE 100/UK100 and FTSE 250/UK250MID are the weakest of the leading European Indices. Currently testing key supports minor bounce could be seen before sellers are likely regain control
FTSE 100 dipped down to 0.618 retracement but bounced to close above key support at around 7,296 last week. The Index could however, have another go at the support soon.
FTSE 100 is in a downtrend hovering around 200 daily MA but below 21, 55 and 100 MA’s, and back below the cloud. RSI is showing negative sentiment supporting the bearish outlook. However, there is divergence on RSI suggesting we could see a correction but if RSI closes below its short-term rising trendline bear trend is likely continue with new lows below key support at round 7,296. Next support at around 7,076.
A close above could produce a short-term relief rally to the 0.618 retracement at around 7,681.
UK100 cfd. Dipped to bounce from 0.618 retracement. Trend is down but RSI divergence indicating a rebound possibly up to around 7,670 i.e., the lower part of the cloud.
FTSE 250. SHS pattern potential target at around 18,494 has been reached. 18,494 is also a strong support level from where we could see a minor rebound possibly up around 19K. If closing above 200 daily MA there could be upside to around 19,500.
RSI is showing negative sentiment but with divergence indicating a bounce/correction. However, if FTSE 250 once again closes below 18,494 and RSI closes below its rising trendline the down trend could be extended to around 17K
UK250MID cfd. Bounced from 18,000 to close back above 18,408 support testing the 0.382 retracement. With RSI divergence further bounce could be seen possibly up to 19,000-19,290 i.e., the 0.618 retracement of the sell-off.
But if UK250 closes below 18,408 and RSI closes below its rising trendline sellers could regain control to push the UK250 lower. Low from last week just below 18K is a key level to look out for. A break below could fuel further sell off down to around 17K .
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As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
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