FTSE 100 Index Tanks As The Sell-Off In UK Shares Intensifies
FTSE 100 (INDEXFTSE: UKX) index has plunged to fresh 3-month lows as the inflation in the UK remain elevated. The benchmark index is currently 7.32% down from the yearly high, and the technical analysis point towards more downside in the coming days.
On Tuesday, the index tracking FTSE 100 companies fell by 0.42%. The drop followed a 0.22% bounce on the first trading session of the week. Other than a few bank shares, most constituents of the index also showed a negative price action.
The Fall In FTSE 100 Index Comes As No Surprise
I accurately predicted rejection of the FTSE 100 index from the 7,900 level in multiple forecasts. If you were following me on Twitter or Telegram, the ongoing downtrend must not surprise you. Actually, a lot of fundamental and technical factors were predicting this drop.
The major headwind for UK equities is the high inflation rate in the country. The May 2023 CPI report showed a 0.7% increase in inflation which intensified the sell-off. There seems to be more downside for the major UK shares in the coming days.
FTSE 100 Index May Tag 7,300 Soon
The following INDEXFTSE: UKX chart shows a few key levels on the chart. These levels may act as areas of support and resistance for the benchmark index. After a rejection from the 7,600 resistance earlier this month, the index is now heading for a retest of the 7,300 level, which is the next major support.
FTSE 100 index forecast may become extremely bearish if the index breaks below the 7,300 level. This may open the floodgates to a much deeper pullback till the 6,700 level, where lies the October 2022 low.
Therefore, the 7,300 level may act as a line in the sand for many investors. The recent sell-off in US stocks may increase the selling pressure across the Atlantic in the coming days.