The UK100 Index has rebounded strongly after the selloff in global equities earlier this week. The chart shows price action has risen to the upper trend line of the channel overnight, creating a new higher high at 7465.00. The market has been supported by moves in pound sterling and the risk-on mode. Should the market continue its uptrend, the 7500.00 level is looming, with substantive resistance around the 7511.0-7512.00 area. Above there, the 7563.60 level has been resistive and supportive ahead of 7600.00.
Support comes with the red rising trend line, which has been used consistently over the past month, despite the steepness of its slope. A trend line of this attitude is hard to maintain but it performed remarkably well this week, showing the willingness of traders to buy against support. The line comes in at 7382.00 today, with a loss of this line potentially putting long positions under pressure and targeting support at the lower blue trend line at 7300.00. The 200 DMA is at 7325.3 and will support these trend lines in the coming days. A loss of the 50 DMA at 7250.00 sets up an opportunity for bears to turn sentiment but it would need to be correlated with a move in GBP.
The EURCAD pair is moving lower this week, continuing the trend started over a month ago. Support at 1.54624 allowed for a retracement higher but yesterday price fell under the 50 DMA at 1.56625 and is today using this indicator as resistance. A drop from the current level to the 100 DMA at 1.55112 is achievable but wouldn’t be decisive until the April low is taken out. At this point, support shifts to the 1.53693 level as the November high and the support level used in the second week of February. The 200 DMA is stationed below at 1.52623, with the rising trend line closing in on the 1.52000 level. A loss of this line targets this year’s low of 1.48156.
Resistance is found at 1.57000 as the high of this week, with 1.57600 above. A move above this area reasserts the prevailing bullish trend and the retracement could be seen as a continuation pattern. This would target the 1.60000 level and the recent highs at 1.61500, followed by 1.63000 area in extension.