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It’s the UK 100 ’s commodity contingent that is holding it back from more impressive gains this morning. A stronger USD is the result of from hawkish Fed chat weighing on metals prices (industrial and precious) and their Miners (down 2-4%) and a pullback by oil prices weighing on general sentiment for the key space.
This is not, however, preventing positive technicals from offering a brighter start to the trading week, reviving investor appetite for risk. A bullish double-bottom reversal at 6840 and a breakout at 6870 within the first hour of trading offers potential for the UK blue-chip index to make its way back towards recent 6950 highs, possibly even on towards the magic 7000 mark.
With longer-term bullish patterns still in play (bullish flag + bullish inverse head & shoulders reversal) there is still potential for all-time highs of 7135 to be revisited. The index may well have topped out recently at 6950, its daily RSI suggesting it overbought, however, what looks like rising support for this technical signal (coupled with the index bouncing off 6-week resistance-turned-support at 6840) could help fuel another welcome up-leg for bulls hoping that the post-Brexit bounce still has legs.
Mike van Dulken, Head of Research, 22 Aug
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