U.K. Markets Showing Stable Recovery
Stock-Markets / UK Stock Market Sep 02, 2019 - 06:11 PM GMTBy: Submissions
Recent moves in the U.K market have highlighted deteriorating sentiment levels as a result of continued Brexit uncertainties. However, it can be argued that many in the market have overreacted in response to these events as a limited impact has actually been seen in equities.
As a clear expression of these trends, the U.K. 100 Index retraced some of its prior gains during the trading period that spanned from July to August of this year. In the process of these declines, U.K. stock markets have fallen through their 50-day and 200-day exponential moving averages. In most cases, traders will view these types of events as exceedingly bearish.
However, those retracements have been relatively small when compared to the broader progress that has been made in the exchange-traded fund since the beginning of 2019. When we view this key U.K. stock instrument from this perspective, these retracements are holding above 50% Fibonacci levels and this largely suggests that the broader trends remain positive.
Indicator readings have been positive, with the RSI on the daily charts consistently moving higher. Despite these upside moves, we are still holding below the middle ranges in the indicator histogram and this ultimately suggests that we still have much more room to extend to the upside.
It should be noted that when we view this price history and analyze the lows that have developed within the daily trend, the indicator readings in the RSI have fallen lower as U.K. share prices were making their summer lows. In the end, this could suggest that a sizable amount of momentum is still focused on the downside direction and that coming gains might be somewhat slower in comparison. Historical demand levels are likely to come into play once again in any case bearish daytraders are able to force prices downward into the 7,020 level. This is now likely to be viewed as a prior resistance point that will not hold as price support which could be tested in the event that we see a second Brexit referendum emerge.
In the event that we do see bearish daytraders win the day and successfully force prices through this key support level, we could see an even deeper retracement lower as this would ultimately suggest that the longer-term bullish rally has come to an end. In any case, we will likely have an answer to these questions soon as the summer trading period comes to a close and liquidity volumes begin to return to full strength.
By Ask Traders
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