Technical Analysis – UK 100 slumps to 13-month lows; technicals point to oversold picture
February 6, 2018 4:26 pm
The UK 100 index came under severe pressure on Monday, sinking by almost 4.0% in one day towards a 13-month low of 6,917. On the way down, the market broke a critical support level at 7,195.
Technical indicators hint that the recent downturn might remain in place for a while as the index is currently trading well below the 20-, 50- and 200-day simple moving average lines, as well as the Ichimoku cloud. However, in the short-term, we cannot exclude any upside movements yet as the RSI indicates that the market might be oversold; the indicator has crossed below the 30 oversold level.
To the upside, immediate resistance could come around 7,276 – a previous frequently-tested support area. Further gains above this level would target the 200-day SMA at 7,455 before the index approaches the 50-day SMA at 7,555. Any break above the latter would start shifting the focus to 7,806, a record high level.
If the market corrects lower, today’s lows emerged between 7200-6910 could act as potential barriers.
In the medium-term, the outlook turned negative after the index breached December’s trough of 7,276 and now the market needs to crawl above that level to change this bearish status.
The UK 100 index came under severe pressure on Monday, sinking by almost 4.0% in one day towards a 13-month low of 6,917. On the way down, the market broke a critical support level at 7,195.
Technical indicators hint that the recent downturn might remain in place for a while as the index is currently trading well below the 20-, 50- and 200-day simple moving average lines, as well as the Ichimoku cloud. However, in the short-term, we cannot exclude any upside movements yet as the RSI indicates that the market might be oversold; the indicator has crossed below the 30 oversold level.
To the upside, immediate resistance could come around 7,276 – a previous frequently-tested support area. Further gains above this level would target the 200-day SMA at 7,455 before the index approaches the 50-day SMA at 7,555. Any break above the latter would start shifting the focus to 7,806, a record high level.
If the market corrects lower, today’s lows emerged between 7200-6910 could act as potential barriers.
In the medium-term, the outlook turned negative after the index breached December’s trough of 7,276 and now the market needs to crawl above that level to change this bearish status.
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