• The UK100 has declined this week after starting brightly
  • The market has now produced a technical signal which previously has been fairly successful in calling trend changes
  • A break below the weekly low of 7332 would be seen as further evidence that more declines lie ahead

The UK100 (underlying FTSE 100) has moved steadily lower this week with a move higher on Monday met with a strong reversal on Tuesday. Since then the market has continued to drift lower and in doing so has printed a technical signal that has previously seen further declines.  

 The 8 and 21 period EMAs have printed a bearish cross (8 moving below 21) this week and these crosses have historically worked fairly well at highlighting trend changes. For instance back in early May there was a bullish cross (8 moving above 21) which saw the market rise strongly for several weeks afterwards. 

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 The 8 and 21 period EMAs on a D1 chart have printed a bearish cross. This could be seen as signalling a trend reversal and now suggest that further declines lie ahead

In terms of levels to keep an eye on going forward the week’s low at 7332 could be worth watching with a break below here opening up 7246. A break below 7246 would open up the possibility of filling the gap higher seen on the 1st round of the French Presidential elections from 7060 to 7133.

On the other hand a move back above the EMAs could be seen as negating this setup. With the 8 period currently at 7407 and the 21 at 7437 a clean move back above these may put an end to the current downtrend and see prices attempt to rise back towards the all-time high at 7585 once more.