The FTSE100 has started to look like it may need to correct lower before it heads higher again as the leading UK index starts to move away from the best levels of the year.
Going forward the UK100 is well placed for more gains towards the 8,000 level if the Fed only hikes rates by 25 basis points at the next meeting and tech stocks starting to take-off.
It is also noteworthy that the technical picture looks to be short-term bearish and medium-term bullish. More on this later as we now move towards current sentiment metrics.
In the interim, layers of bearish MACD price divergence are warning that a correction may kick-in at any time. However, based on the recent multi-year range break the UK100 remains a strong buy on dips.
I believe the next move towards the 7,200 to 7,000 area could be a generational buy and this may be the area to accumulate the UK100 for a big move towards the 8,000 level and beyond.
Sentiment remains very bearish, which could be great for further price gains ahead for the UK100. With retail looking to short we could see the FTSE100 holding above the 7,500 level.
If we look at the ActivTrader Market Sentiment tool, 87 percent of traders are currently bearish. This metric has increased by 10 percent since last week. However, more losses are likely. Based on the current sentiment reading I think it is highly probable that we could see more upside, which is a concern for shorts right now.
UK100 Short-Term Technical Analysis
According to the MACD indicator on the four-hour time frame the UK100 has started to form huge layers of bearish MACD price divergence.
This should be a concern for bulls, but it also could be an encouraging sign for accumulators who would like a final chance at buying close to the 7,000 support zone.
UK100 Medium-Term Technical Analysis
The daily time frame shows that the UK100 is clear of resistance and a move towards the 8,00 level would certainly be possible based on the current price pattern.
If we see the UK100 starting to move towards the 7,900 then the all-time is within touching distance. All eyes will be on a huge break out above 8,000. However, technical analysis favours 8,700 over the very medium-term.