Technical Analysis – UK 100 index rises near 40-day average

Melina Deltas, XM Investment Research Desk

UK 100 stock index (FTSE 100) has advanced considerably over the last couple of days after touching the 7124 support, remaining below the 50-day average. The stochastic oscillator is confirming this view, as it is heading north, approaching the overbought territory.

If the price manages more bullish actions and surpasses successfully the 50-SMA, immediate resistance would come from the 61.8% Fibonacci retracement level of the downleg from 7900 to 6533 around 7380. Further up, the index could rest around the 7530-7560 resistance area.

On the other hand, in case of bearish structure the market might revisit the 50.0% Fibonacci of 7220, which stands slightly above the 200-SMA. More declines could meet the 7124 support and the 38.2% Fibonacci of 7060.

Overall, a jump above the 61.8% Fibonacci again could confirm the near-term bullish tendency in the daily chart.