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.

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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