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 5th, while yesterday, it fell below the 7330 zone, which acted as a key support on May 25th and 26th. FTSE is still below that barrier and thus, we will consider the short-term outlook to still be negative.
Even if the recovery continues for a while more, the bears could take charge again 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 March 11th and the inside swing high of March 7th. If the bears do not stop there, then we may see them diving all the way down to the 6845 barrier, marked by the low of Marc 8th.
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 as well. 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 a clear recovery above the 7500 zone, marked by the high of May 6th. Such a move could encourage advances towards the high of May 5th, at 7620, or the peak of April 11th, at 7670. If the bulls do not want to stop there, then we may see them climbing all the way up to the 7790 territory, marked by the highs of July 31st and August 7th, 2018.
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