Top pick for the day - UK’s FTSE100

The next down underway?

The MT trend for UK’s FTSE100 is still up but... we think a break below the channel support is likely

FTSE100 has not been enjoying a good ride since early this year, gaining only 2% YTD compared to its fellow countries in Europe, with Euro Stoxx gaining 14% YTD and Germany’s DAX gaining 15% YTD. 

FTSE100’s gain may turn into a loss in the next couple of months as the fall from 7,123 high in April is far from over. Prices appear to be forming a continuation triangle pattern but there could be one more up and down sequence before the triangle pattern is complete. 

Besides that, MACD is trading in the negative territory while RSI is below the resistance level, which supports our bearish view

However, a drop below 6,496 would confirm that the next leg down is underway. Prices could take out the channel support (now at 6,461) and retest the 6,072 low. 

Meanwhile, its resistance is at 6,813 and 6,873

We believe that FTSE100’s ST downtrend is not done yet but a tad more sideways consolidation is likely in the next couple of weeks. (Read Report)

Source : CIMB Research