The UK 100 index hit a fresh all-time high of 7,756.10 during today’s trading, with the index posting a notable rally since the beginning of December.
The Tenkan- and Kijun-sen lines are positively aligned, pointing to a bullish picture in the short-term. The RSI is supporting this view: the indicator remains on the rise, though it has crossed above the 70 overbought level, rendering a short-term pullback a possibility.
Further advancing could see the index finding a barrier around the 161.8% Fibonacci extension at 7,781.43 of the downleg from 7,588.60 to 7,276.30. The 7,800.00 handle – a potential psychological level – would be eyed next for additional resistance.
On the way down, support might come around the current level of the Tenkan-sen at 7,682.85 and further below at the top from early November of 7,588.60.
The medium-term picture is beginning to look increasingly bullish after a period of significant sideways movement. Price action is taking place above the Ichimoku cloud, as well as above the 50- and 100-day moving average lines, with both lines starting to turn higher. A bullish (golden) cross was also recorded in late October when the 50-day MA moved above the 100-day one; given that to a large extent the MAs have moved sideways since the cross, it might be early to perceive this as a strong positive signal though.
Overall, the short-term bias is bullish with some caveats given that RSI is at overbought levels, and the medium-term looks to have entered a bullish phase.
