FTSE 100, gold hold above support while GBP/USD grinds higher
Technical analysis of the FSE 100, GBP/USD and gold as they hold above support following last week’s sharp sell-offs.
Macro update
Wall Street tumbles:
US equities suffered their sharpest decline in more than a month, with the S&P 500 dropping 1.66% and the Nasdaq 100 falling 2.29% as losses in major artificial intelligence (AI) names dragged the market lower.
Big tech under pressure:
Nvidia slid 3.6%, Tesla dropped 6.6% and Broadcom fell 4.3% as investors reassessed elevated valuations across the AI and semiconductor space.
Rate-cut expectations weaken:
Hawkish remarks from Federal Reserve (Fed) officials pushed the market-implied probability of a December rate cut towards 50%, pressuring stocks, bonds and the US dollar.
Rotation into value:
Consumer discretionary and tech stocks led declines, while value shares outperformed growth over the week.
Global risk-off tone:
Asian and European futures softened and Treasury yields inched higher as investors awaited delayed US economic data following the end of the shutdown.
FTSE 100 bounces off support
Last week the FTSE 100 swiftly came off its 9,928 record high amid global risk-off sentiment but managed to level out at 9,606 on Friday, close to the critical early November low at 9,572. As long as this level holds, the medium-term uptrend remains intact. Failure there may lead to a top forming, though.
Minor resistance is seen between the late October and early November highs at 9,792-to-9788.
FTSE 100 daily candlestick chart
GBP/USD grinds higher
GBP/USD has recovered from last week's $1.3085 low and is aiming for last week's $1.3216 high as well as the September-to-November downtrend line at $1.3230. This needs to be overcome for the 200-day simple moving average (SMA) at $1.3284 to be reached.
Were a fall through last week's low at $1.3085 to ensue, though, the early November trough at $1.3010 may be revisited.
GBP/USD daily candlestick chart
Gold finds support
Last week the gold price came off its $4,245.19 per troy ounce high and dipped to $4,032.23 on Friday, a level above which it currently holds. Together with the August-to-December uptrend line at $4,019.98 it offers support.
While this area holds, the $4,150.00 region may be revisited. Were it to give way, though, the gold price would be expected to trade in the sub-$4,000.00 region for at least several days.
Gold daily candlestick chart
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