The UK FTSE 100 cash index tumbled today, breaking below the key support (now turned into resistance) barrier of 7225, marked by the low of Jan. 24. In our view, this may have signaled a near-term trend reversal on the daily chart and opened the door for further declines.
At the time of writing, the index is very close to the 6970 obstacle, marked by the low of Nov. 30, where a break could extend the fall towards the 6825 zone, which provided support on May 13, Jul. 19 Sept. 20. If there are no buyers near that zone either, we could see the price diving towards the 6619 territory, marking the low of Mar. 25. Another break, below 6619, could pave the way towards 6460, defined as a support by the low of Feb. 26.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, slightly above 30, and points down, while the MACD runs below both zero and trigger lines, pointing south as well. Both indicators detect strong negative momentum and support the notion for further declines.
On the upside, we would like to see a clear rebound back above 7500, marked by the peak of Mar. 1, before we abandon the bearish case. This could initially open the path towards the peak of Feb. 10, at 7690, the break of which would confirm a forthcoming higher high on the weekly chart and may set the stage for advances towards the record high of around 7900, hit on May 22, 2018.
In case market participants decide to enter the uncharted territory, then we will consider as the next resistance zone the psychological round figure of 8000.
