Possible short/medium-term Bullish action in UK100

Author: Vin Coco, participant of the Analyst Contest

The index is trying to close today’s action with purchase recovery. Although the medium-term trend is still set to the downside, today’s close seems to confirm a temporary stop, with the possibility of an upward move in the following days.

Elements to be considered for the Trading Forecast (Technical Analysis):

PROS:

• Side by side Bullish Candle Pattern, 3 x Bullish Engulfing (green arrows);
• The Candle Patters is at Multi-tested Turnaround Support (Old Resistance has now became Support);
• The 6100 Round number is acting as Support;
• Rising channel/trend line is supporting price (Blue dotted line);
• Risk:Reward is 2:1 for the 2nd target; (purple arrow on the right);
• The possible bounce is at about 32.8 Fibo retracement;
• Stochastic Divergence;
• The Price has closed above the EMA (green line);
• SMA 20(blue) and 50 (red) are still set in Bullish configuration;
• On W chart (Image nr.2) the target converges to the upper side of the Descending Channel (in dotted red) and the Resistance Zone bounded by the blue rectangle.

CONS:

• The long term trend has still a negative bias;
• The price is still in a box range;
• The worst R:R scenario has only about a 1:1 ratio (leftmost purple arrow);
• The SMA200 is still above the price and can “compress” it to the downside;
• The area 6180-6200 (round number) could act as Resistance;
• On Weekly chart (medium-long term) the SMA 200 and SMA20-50 are set in Bearish Mode.

Daily

Weekly

Any comments and suggestions below are very welcome.

Source:: Possible short/medium-term Bullish action in UK100