Português
Español
Français
русский
The FTSE100 share index has tested back towards the 7,600 level as investors get spooked by persistent inflation and investors saw little signs of progress in US debt talks.
Yesterday, the FTSE100 closed down almost 1.8%, as the combination of higher-than-forecast inflation and US default fears led to the biggest sell-off of London stocks in months.
The decline was the biggest in more than two months, and the closing figure the lowest since March. Much of the spill over effect came from US equity markets as they cratered lower.
The ONS’s inflation figures shocked the City again this morning, coming in much higher than expected for the third month in a row, at 8.7%. Economists predicted more rate rises in this instance.
In the UK100 Housebuilders made up many of the biggest fallers, amid fears that interest rates could rise to as much as 5.5%, which could negatively house purchases going forward.
Ocado and Intertek were notable exceptions, finishing up 2.3% and 3.2% respectively to be the biggest risers of the day. Miners also suffered as the price of gold fell lower and mining costs rose.
Sentiment remains increasingly bullish, which could be a bad sign for further price gains ahead for the UK100. With retail looking to go long we could see the FTSE100 heading higher towards the 7,500 level.
If we look at the ActivTrader Market Sentiment tool, 88 percent of traders are currently bullish. This metric has increased by 10 percent since last week, meaning more losses are still likely.
Based on the current sentiment reading I think it is highly probable that we could see a new monthly low, which should be a concern for long right now.
UK100 Short-Term Technical Analysis
According to the four-hour time frame the UK100 is starting to unwind layers of bearish MACD price divergence which have been in play since March this year.
This should be a concern for bulls, the loss of the 7,800 area this month should be a bad sign as this critical support zone denotes the short-term trend. Further negative divergence is seen down towards 7,500.
UK100 Medium-Term Technical Analysis
The daily time frame shows that the UK100 has reversed lower towards a key long-term trend, however, the overall price trend still remains bullish while the price trades above the 7,500 area.
If we see the UK100 starting to move towards the 8,000-resistance level, which could certainly hint that a massive move could take place to the 8,800 area, however, we need to see the reaction around 7,500 first.
