Weekly Indices Review - 30 November

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For the past few weeks, we have zoomed into the daily and even hourly charts so for this week we zoom back out to the weekly chart on the UK 100 to help put the recent moves in better context.

On this chart we can see the pandemic crash and the resultant recovery. Here in the UK the recovery was rather muted as the index has still failed to recover past the pre-pandemic highs. Highs which the US indices have powered through some time ago.

In recent weeks the price action started to move back towards major Fibonacci retracement support around 6566, the 38.2% area. While price action remains above here buyers traditionally remain fairly confident that the underlying trend remains intact.

From this move however the index has posted a broad bearish treading range. Price action currently is at the upper resistance of this range.

Can the buying interest continue through this key resistance area?

We remain concerned about the ability for buyers to remain interested without further support from fundamental data. Rather like during the summer the “hopes” that inflation has peaked has rather run ahead of the facts. Without confirmation that inflation has in fact continued to ease this recent rally could quickly fade into yet another failed bear market rally.

So, the markets will remain fixated on the inflation data, most notably the US inflation data. The next US CPI print is due on the 13th December, making that date already looming large on the horizon. Perhaps the hope-based buying can continue until then. But traders do need to remain mindful of possible hefty moves if the data here comes in away the expectations.

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