UKX: short positions seems more rational

UKX - Our expectations:

Likelihood of a deeper correction or a beginning of a downtrend after a break below key horizontal support at levels 7090. Wedge formation and post-break correction provide good opportunities to look for short positions with Stop Loss at 7170.00 levels.

The Fibonacci 50 and 38.2 levels of the last bearish wave are a good adjustment to look for profits here. The previous bar has a long shadow and a relatively small body.

The current day opens with a downward gap that supports the negative scenario.

DeM (14) fails to reverse successfully in an oversold zone.

For better positioning, we can expect a price close to filling the gap or around 7030 - 7040.

Fundamentals: The fall in oil prices and the likelihood of a double top is negative as many companies in the index have a large exposure to oil. An additional negative fundamental factor is the rising pound, which makes stocks increasingly expensive and unattractive for new purchases.

Alternative scenario: If the price breaks above the resistances, and over 7090 this will cancel the negative scenario and probably the bulls will again prevail.

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