The FTSE 100 cash index has been in a sliding mode since Tuesday. Yesterday, the index broke the lower bound of the sideways range that had been containing most of the price action since the 10th of October, while today, it fell below the 6840 zone, marked by the low of the 23rd of March, this way entering territories last seen in early December 2017. This week’s slide, combined with the fact that the index is trading below the tentative downside resistance line taken from the peak of the 8th of August, suggests that the near-term outlook has turned back to the downside.
Following the dip below 6840, we would expect the index to continue its slide towards our next support zone of 6650, marked by the low of the 4th of December 2017. Another dip below 6520 could carry more bearish extensions, perhaps towards our next support hurdle, at around 6520, which is defined by the low of the 9th of November last year.
Looking at our daily oscillators, we see that both the RSI and the MACD have fallen below their respective upside support lines. What’s more, the RSI lies near its 30 line and looks ready to fall below it, while the MACD, already negative, has topped and fallen below its trigger line. Both indicators suggest downside momentum and support the notion for this index to continue drifting south.
On the upside, a break back above 6910 may signal the return within the aforementioned sideways range. Something like that may trigger a recovery towards the 7100 area, the break of which could aim for the upper bound of the range at around 7180, or the downside resistance line drawn from the peak of the 8th of August. That said, we would like to see a clear close back above 7220 before we start examining whether the medium-term outlook of the index has turned to a clearly positive one.
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