UK100 – Late rally changes nothing (yet)

More potential downside ahead

We’ve seen a bounce in the UK100 (FTSE 100) in the final hours of trading on Monday but I’m far from convinced this changes the near-term outlook for the index.

UK100 (FTSE 100) 4-Hour Chart

OANDA fxTrade Advanced Charting Platform

Firstly, the MACD and stochastic on the 4-hour chart don’t suggest there is enormous momentum behind the move, even if it is still early on.

Secondly, no key resistance levels have been broken. Of course, there’s plenty of time for this to happen but until it does, this is still a chart that looks vulnerable to the downside.

Should the downside materialize, the same levels apply, with 5,500 being the first test and 5,350 below looking an important level.

As far as the upside goes, small gains don’t change the outlook unless we see a clear break of 6,000. This would wipe out the previous highs and break the 200/233 simple moving average band in the process, at which point the outlook would look much more bullish.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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