Longer term still looking promising
There’s an interesting battle building up in the FTSE 100 ( UK100 ), after which we should have a much better idea of whether this rebound has legs or they’re going to be sweeped from underneath it.
The charts were starting to look quite promising. We had a clear uptrend and price broke back above the 200/233 period simple moving average band on the 4-hour chart.
UK100 (FTSE 100) 4-Hour Chart
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Then we ran into our first obstacle on the daily chart , the 55-day SMA , which is when the profit taking kicked in. This took us back below the 55/89 SMA band on the 4-hour chart where we’re now testing the 200/233 band.
So far, the 38.2 fib is holding within the first band but that doesn’t mean much yet. A break back through 5,800 would add some promise, especially if combined with a significant close above the 55/89 SMA band (4 hour chart). Obviously, that doesn’t necessarily been it’s correction over but it’s a major hurdle overcome.
UK100 (FTSE 100) Daily Chart
Given the initial trend line break , failure of 55-SMA (daily) and immediate resistance around the 55/89 SMA (4hour) band, I fear more pain may be in store for the FTSE .
This still looks like more of a corrective move but maybe one that has a little more to run. The area around the 50 and 61.8 fibs may appeal more, should the 38.2 fib and 200/233 band fall.