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UK100: May be losing bullish momentum

Yesterday European markets closed lower, as investors reacted to a slew of earnings news and economic data. On the data front, euro zone producer prices fell to -3.4% in January at their fastest rate since November 2009. This further added to concerns about the deflationary environment in the Euro zone.

Today on the economic agenda from the Euro zone we have the retail sales in January that is expected to drop from 2.8% to 1.9% showing weakening of consumer spending. On the other side of the Atlantic we have from the ISM Non-Manufacturing PMI in February from the U.S that is estimated to have a slight fall from 56.7 to 56.5 showing a decline in the business conditions in the U.S non-manufacturing sector.

On yesterday session the UK100 fell but found enough buying pressure on upward trend line to turn things back up but closed near the low of the day. The index is in showing weakness in the upward trend although managed to make a golden cross. The stochastic is showing a overbought market setting lower highs and price is making higher highs, signs that the upside may begin to get exhausted.

Expecting a downward move to a daily support at 6,764 on a break of previous day low at 6,844.5 (scenario 1).

UK100 is a CFD written over FTSE100 futures.