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Hugo in HTO Trading,

FTSE 100: Approaching 2017 high

Since the beginning of the year the main UK index gained more than 6.0% but last week rallied practically 2.0% and is in a bullish phase since early October.

Last week the main UK index rallied with a wide range plus closed near the high of the week, in addition managed to close above the previous week high, which suggests a strong bullish momentum.

The stochastic is showing an extreme overbought market and is displaying lack of momentum although is above the 50 mid line.

The Index Broke above the congestion zone at 7,506.5 and seems to be pushing higher toward 2017 high at 7,588. A downward correction maybe around the corner as the Index approaches the year-end and traders want to collect their bonus but to do so they need to take profit.

Expecting a downward move to a key level at 7,287.5 (scenario 1) on a break below the weekly resistance at 7,506.5 although a bounce from the key level at 7,287.5 could set in motion another push to the upside toward a weekly resistance at 7,506.5 (scenario 2).