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UK100 – Breakout imminent?

6,000 looking vulnerable

Recent price action in the FTSE 100 (UK 100) has certainly been encouraging but it may be a little early to celebrate.

UK100 Daily Chart

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OANDA fxTrade Advanced Charting Platform [2]

The pull back a couple of weeks ago was very brief and never really gathered any momentum. Moreover, broadly speaking price never held below the 55/89 simple moving average band on the 4-hour chart, which could be viewed as bullish.

Since then we’ve seen a series of higher lows and the index has broken and held above the 200/233 SMA band, another bullish signal, as it’s traded below here since 20 January – surviving a few tests along the way – and we all know what followed then.

UK100 4-Hour Chart

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OANDA fxTrade Advanced Charting Platform [2]

If the index can break 6,000 then any hope of a test of 5,450 – 50% retracement of lows to April highs – may well be lost and the bullish buzz may once again kick in.

This is a huge earnings week for the US, the next 48 hours or so of which will be pivotal. If stock markets can get through that unscathed, even encouraged, it could be the catalyst for another strong rally, with 6,200 being the next test but 6,500 the next key level.

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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 [9]

Senior Market Analyst - UK & EMEA at OANDA [10]
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 BNN. 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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