UK100 paused its recent downtrend at a six-week low of 7349.80 on November 20 and has been trading flat around that level since then, painting a neutral picture in the short-term. In the medium-term, the index is also in a consolidation phase.
The index is currently located inside the Ichimoku cloud, retracing the 50% Fibonacci level of the upleg from 7194.70 to 7588.66 (September 15 – November 7) at 7391.04. In the short-term, the bias is likely to remain neutral as the RSI is moving sideways slightly below 50, while the oscillator is also flat in the four-hour and the one-hour chart. The Kijun-sen and the Tenkan-sen lines, which posted a bearish cross on November 17 have also flattened out, supporting this view.
In case downside pressure emerges, the index is likely to find support around the 61.8% Fibonacci at 7344.94, where the 200-day exponential moving average is also placed. However, any violation of this point would extend the downleg started from a six-month high of 7588.60 on November 7, turning the short-term bias from neutral to bearish. Then from here, steeper declines would also target the 78.6% Fibonacci at 7278.03.
To the upside, the 38.2% Fibonacci of 7437.15 could represent strong resistance as the 50-day EMA is also laying in that area. Further increases would meet additional resistance levels at the 23.6% Fibonacci of 7495.01 and at the previous top of 7588.66.
To sum up, in the medium-term, the outlook is neutral as long as UK100 moves between 7194.70 and 7588.66.