FTSE backs off further from highs

<p>The FTSE 100 (daily chart) has backed off further from its long-term highs as the UK equity index has retreated from major resistance around the […]</p>

The FTSE 100 (daily chart) has backed off further from its long-term highs as the UK equity index has retreated from major resistance around the 6875-6885 zone. Since the multi-year high of 6896 was hit recently in mid-May – the highest peak in almost 15 years – the index has repeatedly retested that resistance zone but has been unable to surpass it as of yet.

In its current pullback from resistance, the FTSE has broken down decisively below its key 50-day moving average, and is quickly approaching its 200-day moving average immediately to the downside. The latter major moving average is currently situated around a long-term uptrend line extending back to the 2012 lows. Just below this trend line and the 200-day moving average is a key support level around 6650.

Like its US and global equity index counterparts, the FTSE 100 has been overbought and overdue for a deeper pullback or correction for several months. The current decline could be a precursor to such a pullback. A breakdown below the noted support area surrounding the 200-day moving average, the long-term trend line, and the 6650 support level could prompt a more significant sell-off towards further downside support around 6500 and below. Intermediate upside resistance now resides around the 6800 level.

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