FTSE 100 Sellers Eye Key Levels Amid Profit-Taking

Market Overview

The UK FTSE 100 (UK100) index has faced selling pressure as investors lock in profits. This comes as inflation in the UK nears the central bank’s target level, prompting expectations that the Bank of England will keep interest rates steady at 5%. The combination of stable rates and profit-taking from shareholders has contributed to a correction in the FTSE 100 after a week-long upward trend.

Technical Outlook

On the four-hour chart, the FTSE 100 has entered a corrective phase as buyers retreat from the uptrend that began on September 9. The index is now testing a key support level at 8280.80, and a sustained break below this point would confirm the completion of a bearish head-and-shoulders pattern. If the sellers succeed in breaking this level, the next targets are 8272.04, 8267.47, 8260.90, and finally 8248.60.

Momentum indicators support the bearish scenario. The RSI shows weakening bullish momentum as it trends downward, and the MACD has shifted to negative territory, signaling increased selling pressure. Moving averages are mixed, reflecting a market at a potential turning point.

Oscillator Confirmations

RSI: Moving lower, indicating decreasing buying pressure.

MACD: Turning bearish, with negative momentum growing.

Moving Averages: Mixed signals, with short-term averages pointing to possible weakness.

Alternative Scenario

However, if buyers regain control and push the price above the right shoulder resistance at 8313.00, the bearish pattern will be invalidated. A break above this level could reignite the bullish trend, leading to further gains for the FTSE 100.

Key Levels Overview

• Resistance Levels:
  • Resistance 2: 8313.00
  • Resistance 1: 8293.10
  • Current Price: 8290.00
• Support Levels:
  • Support 1: 8280.80
  • Support 2: 8272.04
  • Support 3: 8267.47
  • Support 4: 8260.90
  • Support 5: 8248.60

Key Events to Watch

The Bank of England’s interest rate decision on Thursday is a crucial event for market sentiment. It is widely expected that the central bank will keep rates unchanged. Additionally, the number of officials advocating for a rate cut in September may drop from five to two, reinforcing expectations of steady rates. This scenario could strengthen the pound but may weigh on UK equities as investors shift their focus away from stocks.

The minutes of the central bank meeting will also provide valuable insights into the future direction of monetary policy, helping to shape market expectations for the coming months.

Conclusion

The FTSE 100 is facing downward pressure as investors take profits and prepare for the Bank of England’s rate decision. A break below 8280.80 would confirm a bearish reversal, with targets at 8272.04, 8267.47, 8260.90, and 8248.60. However, if buyers manage to break above 8313.00, the index could resume its upward trajectory. All eyes are on the central bank’s next move, as its policy stance will play a key role in the FTSE 100’s near-term direction.

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