UK 100 index has reversed back up again after finding support at the 16-month low of 6760. The index is on track to record a third green week, however, looking at the 4-hour chart, the price is stuck below the 50.0% Fibonacci retracement level of the downleg from 7806 to 6760. The technical picture supports that the range bound is likely to continue in the short-term.
Technically, the momentum indicators are holding in the positive territory with weak momentum. The RSI indicator is moving slightly to the upside, however, the MACD oscillator is falling below its trigger line, creating negative divergence and signaling for a possible downside correction.
If the price surpasses the 7273.60 resistance level and jumps above the 50.0% Fibonacci, this would reinforce the bullish view and open the way towards the 7340 barrier. Above this level, the next target could come at the 61.8% Fibonacci mark of 7406, posting a new two-month high.
On the flip side, if the bears take back control, the bullish rally may stall initially near the latest highs and turn negative. In such a case, the next immediate support comes from the 38.2% Fibonacci near 7160, which stands near the 40-simple moving average (SMA) in the 4-hour chart. A potential downside violation of this barrier would raise the likelihood of more declines towards 7120 taken from the lows on April 6.
