The UK 100 stock index is pushing efforts to return above the ascending trendline drawn from the 6,535 bottom after the 50% Fibonacci of the 6,535-7,728 bullish wave provided significant support last week.
Failure to close decisively above that line could bring the 50% Fibonacci of 7,133 back under the spotlight. If the bears clear that support this time, negative momentum could pick up steam towards the 7,000 mark where the 61.8% Fibonacci is placed. Further down, the 6,900 level could attract interest given its restricting nature in previous sessions and if this proves easy to get through, then the 78.6% Fibonacci of 6,790 may come next in line.
Still, with the RSI and the MACD improving in the bearish area, upside extensions in the price cannot be excluded, especially if the bulls manage to cross above the nearby 38.2% Fibonacci resistance of 7,273. Crawling higher, the 23.6% Fibonacci of 7,446 that has been a remarkable blockade to the bulls could apply downside pressure ahead of the 7,560 barrier.
Looking at the bigger picture, the index seems to have completed an upside Elliot five-wave pattern that stalled at the one-year high of 7,728 and it remains to be seen whether a downside three-step corrective pattern is in progress as the index has been in a range so far.
Summarizing, the UK 100 index is facing upside pressure in the short-term, though only a significant close above the ascending trendline could validate the positive signals. In the bigger picture, the completion of an Elliot five-wave upside pattern increases the odds for a three-step downtrend to come into play.
