FTSE Stocks Regain Some of Yesterday’s Lost Ground

This week started with global stock markets’ expectations from the central banks’ meeting at Jackson Hole.

Most indices ended yesterday in the red, even if by a small percentage, but the FTSE closed down 1.24%. The overall sentiment after a 2-week long rally has turned to focus on the Fed’s pivot point.

Most global markets are waiting for Fed Chair Powell’s speech on Friday at 10 a.m. ET. While the UK stock market is also in anticipation of Fed news, it is also struggling with internal news. In particular government plans to raise taxation and increase government spending.

While for many spending extra government money has its appeal, the market knows that the extra taxation that comes with the policy will eventually stifle growth.

Today’s market has recovered some of yesterday’s lost ground. However, a lot will depend on the US continuing its tech-fueled rally. The NAS100 lost 0.23% yesterday, and the FTSE will likely follow US stock at the open.

Technical View

The day chart below for the FTSE shows a market still stuck in a sideways trend. The top and bottom of the range are wide. But for now, there is no clear direction.

Looking at the RSI we can see that the indicator hasn’t reached overbought or oversold levels since the market hit its all-time high in May. The tight range of the RSI indicates the lack of momentum in the market.

The current candles have found support in the Ichimoku cloud, where it’s also fighting with the resistance of the top side of the cloud. To the downside, the next support is the bottom of the cloud.

Should that level break, the market will find support at 8,036 (black line), a support level from April. To the upside, the market will find resistance at 8,367 (green line) and 8,411 (red line). Both levels correspond to previous attempts to rally higher.