FTSE 100 index (INDEXFTSE: UKX) is gaining strength after a pullback at the start of the month. The index has a strong bounce after tagging the fresh monthly lows. Consequently, the tracker of FTSE 100 companies has risen for four consecutive days. This translated into a 1.54% surge in the last four days.
The latest analysis suggests that the benchmark FTSE 100 index may rise further due to a bullish divergence on RSI. On Tuesday, most of the UK shares opened in green. Till press time, the index stood at 7,797 points.
FTSE 100 Index Bounces After Three Weeks Of Downtrend
The ongoing bounce in the FTSE 100 index comes after three consecutive weeks of downtrend. The Index plummeted by 2.8% in May as it failed to break above its 4,900 resistance. This resistance level was repeatedly mentioned in my articles.
A major reason behind the increased selling pressure in UK equities was the recent 25 bps rate hike by Bank of England. While the US Fed has hinted at a pause in rate hikes, BOE still appears to be committed to hike rates in the coming months.
FTSE 100 Index May Retest 4,900 Soon
Technical analysis of the benchmark index of UK equities INDEXFTSE: UKX shows that there is a bullish divergence on the 4H chart. If the Index closes above 7,808 today then I expect another retets of the 4,900 level in the coming days.
Another rejection from the 4,900 level will make FTSE 100 index forecast very bearish. In such an event, bears may target the 7,500 level which lies at the 200 moving average on the daily chart. Before this level there also lies a support zone at 7,600.
I’ll keep sharing my updated price outlook on FTSE 100 and other UK shares in my free Telegram group, which you’re welcome to join.