UK 100 Index- Breakout or Fake Out Above Range Highs?

While other UK markets, like GBPUSD or Government bonds have been under pressure recently, the UK 100 index has been outperforming due to its composition of multi-national companies.

In fact, the fall in the GBPUSD exchange rate back towards 14-month lows (1.2099 Jan 13th) and a more dovish repricing of market expectations towards a Bank of England rate cut when they next meet in February have helped the UK 100 hit new all-time highs above 8,500.

However, since the break higher last week, the index hasn’t exactly raced away as investors remain cautious around President Trump’s plans for global trade tariffs, tax cuts and spending.

So, with that in mind let’s take a moment to analyse the potential upside and downside scenarios from this point by looking to what the Pepperstone charts and technical indicators show.

Technical Update:

Since the May 2024 highs, the UK 100 index has been caught within a choppy sideways price range, reflecting a search by traders for the next directional themes. This type of activity often suggests balance between buyers and sellers, with neither side dominant and able to overcome the other.

In this set up, buying support is strong enough to hold and reverse price weakness back to the upside, while selling pressure continues to be found at the upper extremes of the range, which proves to be strong enough to reverse any price strength and prompt fresh declines.



Within the UK 100 index, buyers have been found at lower range extremes marked by the trendline dating back to August 5th 2024 extremes at 7906. However, it was the downtrend from the May 2024 highs at 8477 that has highlighted the upper range extremes that have held previous attempts at price strength and prompted fresh weakness.

This balance between buyers and sellers can remain for a prolonged period and it is only when one side is able to produce a successful closing break of either the support or the resistance, that the range ends and potential then turns towards a new trend.

For the UK 100 index, January 17th may prove a breakout session, where buyers may have finally gained the upper hand, prompting closes above the upper extremes of the 8 month sideways range.

Clearly, the question now is, does this represent a positive breakout, or a fake upside move?

Historically, it could be suggested that previous upside breaks from similar sideways ranges, have resulted in further price strength. However, this is no guarantee of a similar move for the UK 100 index this time around, and much will still depend on future price trends.

That said, the upside break and subsequent shift to new all-time highs this week may lead to a more sustained period of price strength, and ultimately the development of a positive trend.

That said, it is possible within this type of technical pattern to see a ‘pullback’ to retest the old trendline, which having previously been a resistance area, potentially should now become a support zone. This currently stands at 8350, so it’s possible a correction in the price of the UK 100 index can still be seen back towards this level.

However, it is important to note, any breaks and closes back under this support zone might suggest the latest push to new all-time highs was a false upside break, which could in turn lead to further price declines back into the recent range again.

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