Technical Analysis – UK 100 index sinks after impressive rally

Melina Deltas, XM Investment Research Desk

The UK 100 index created an impressive bullish run today, overcoming the 6185 barrier and returning quickly lower. The mixed signals in the short-term oscillators reflect a possible stall in the price. The MACD has barely inched above its red trigger line in the positive region, while the stochastic %K line promotes weakness as it is turning lower in the overbought territory. However, the Ichimoku indicator is endorsing a bullish scenario as the red Tenkan-sen line stands above the blue Kijun-sen line.

If buyers manage to jump above the 6185 level, a revisit of the 6273 mark could unfold. Surpassing these constrictions could see resistance develop at the 6323 level, taken from the peak on July 15. Another leg up could tackle the 6510 resistance, registered on June 8.

Otherwise, if sellers drive the pair below the 6185 support, the 6144 barrier could interrupt the pair ahead of the red Tenkan-sen line at 6114. In the event selling interest persists, the key support region of the 40-period simple moving average (SMA) at 6040 and the Ichimoku cloud at 6006 could halt the decline. Should it fail to do so, the 5977 support could challenge the bears before the price sinks towards the 5850 trough.

Summarizing, the rebound on the 5850 support opened the door for a bullish movement in the short-term timeframe. Though, in the longer timeframe the index remains neutral.