UK100 – Survived the first test

Key support to be tested again?

The rally in UK stock markets has looked vulnerable for some time and with investors seemingly getting nervous in recent weeks, leading to some interesting pullbacks, a larger correction could lie ahead.

A break below 7,000 a couple of weeks ago could have triggered a much steeper decline but the index ran into strong support around 6,800 where the 200/233-day SMA band cushioned the sell-off.

While it has since broken back above that key moving average band, it has failed to reach the last peak and the few times it has tried, it has been firmly pushed back.

While 7,000 has offered some support over the last week, the level still looks vulnerable and a move below could quickly see the 200/233 SMA band come under pressure once more. A break of this and things start to look far more bearish.

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