Michael_Macdonald-XATSUK

UK FTSE to find difficulty maintaining higher levels

TVC:UKX   UK 100 Index
UK equities are consolidating the steep rally from the June lows, as prices turn choppy below congestion around 7000. A push above here cannot be ruled out, as the Tension Indicator continues to advance, but falling stochastics are expected to limit scope , with the critical 7122~ contract high of April 2015 to provide a barrier.

In the coming months, downside risks are expected to increase, as investors maintain a cautious stance, with a close below the 6654.48 low of September opening up lows down to congestion support at the 6500 retracement. Further slippage towards 6300 cannot be ruled out, however, as longer-term studies show fresh downside development.

An unexpected close above 7122~ will open up the 7325, (50%) projection of the 2009-2015 rally, before fresh selling pressure appears.

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