The FTSE 100 cash index traded higher on Tuesday after it hit support at 7158. Before that, though, the price had been sliding since May 5, while yesterday, it fell below the 7330 zone, which acted as a key support on May 25 and 26. FTSE is still below that barrier, and thus, we will consider the short-term outlook to be still negative.
Even if the recovery continues for a while more, the bears could retake charge from near the 7330 zone, or even the 7395 territory, marked by yesterday’s high. The forthcoming slide could result in another test at 7158, the break of which would confirm a forthcoming lower low on the 4-hour and daily charts and may initially target the 7055 or 7035 barriers, marked by the low of Mar. 11 and the inside swing high of Mar. 7. If the bears do not stop there, we may see them diving down to the 6845 barrier, marked by the low of Mar. 8.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from below-30 and crossed above that 30 mark, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators detect slowing downside speed, which adds to the idea of seeing further recovery before the next leg south.
We will abandon the bearish case if we see an apparent recovery above the 7500 zone, marked by the high of May 6. Such a move could encourage advances towards the high of May 5, at 7620, or the peak of Apr. 11, at 7670. If the bulls do not want to stop there, we may see them climbing up to the 7790 territory, marked by the highs of Jul. 31 and Aug. 7, 2018.
