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Technical Analysis – UK 100 remains volatile amid an overall bearish outlook



The UK 100 cash index has recouped some of its March losses during the last few trading sessions. However, this month’s violent losses have pushed the index below its 50- and 200-day simple moving averages (SMAs), reinforcing the thesis of an overall bearish outlook.

The short-term momentum indicators are painting a negative picture too as the RSI is located below its 50 neutral mark. Also, the MACD is found below zero and its red signal line, which indicates that the negative momentum in the price might be gaining further traction.

Should the bears maintain control, the November low at 6,970 might provide the first line of defense. A break below this point could intensify selling pressures, opening the door towards the September low at 6,827, before sellers take aim at the 6,761 level.

On the flip side, if bulls manage to cross above the area which includes the 200-day SMA and the 7,225 barrier, this could turn fortunes around for the index, sending the price to test the November high at 7,400. Crossing above the latter, buyers could then eye the 50-day SMA currently at 7,440.

In brief, the overall outlook for the index has turned bearish. For sentiment to change, buyers would need to break above the 200-day SMA. 

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