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This week the UK 100 extended its pullback from 2019 highs. Déjà vu? You’re not mistaken. I wrote the same last week. The index even broke below 7300 to test 7200, a level we are re-testing as I type.
Will this prove a mini-range which helps the index bottom out? Or is it merely a within the current sell-off, before yet another next leg lower?
Bulls need a break back above 7220 (lows of this morning) for another rally back to 7280 (current channel ceiling). An upside escape from this channel, and a break above 7300, could be just the evidence required of a bullish reversal towards 7500, the levels we traded but two weeks ago.
Bears, on the other hand, require only a breach of 7190 (support, channel floor) to open the door for a drop back to mid/late-March lows of 7159. Below that, we’re talking about March lows around 7082.
The outcome of the US-China trade talks this weekend could have a big effect on where the index opens on Monday.
Our watch levels: Bullish 7230, Bearish 7180
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