FTSE 100 Overbought Conditions Suggest Caution While Overall Trend Remains Bullish

FTSE 100 Analysis – February 12

FTSE 100 overbought conditions indicate a need for caution, although the overall trend remains bullish. The 9-day Simple Moving Average (SMA) at $8,650 continues to offer dynamic support, reinforcing bullish momentum. The Stochastic Oscillator is currently at 94.42, signaling extreme overbought conditions, which may suggest a short-term pullback. While the market remains strong, traders should be mindful of potential consolidation or retracement before further upward movement. If the Stochastic starts trending downward, it could indicate weakening momentum.

FTSE 100 Key Levels

Resistance Levels: $8,800, $9,000, $9,200
Support Levels: $8,600, $8,370, $8,110

FTSE 100 Long-Term Trend: Bullish

The FTSE 100 recently experienced a breakout, surpassing key resistance at $8,390. This bullish breakout created a gap around $8,650, which could act as a demand zone if the price retraces. Should a pullback occur, the bullish support zone at $8,370 may also provide a strong foundation. Failure to hold these levels could drive the index lower toward psychological support at $8,110.

Looking ahead, as long as the $8,600 support remains intact, the FTSE 100 is likely to continue its bullish trajectory toward the next major resistance at $8,800. A confirmed breakout above this level could pave the way for a rally toward $9,000 and potentially $9,200. However, if selling pressure increases at current levels, a correction into the support zone could present better long-entry opportunities. While maintaining a bullish outlook is reasonable, caution is advised due to overbought conditions.

FTSE 100 Short-Term Trend: Bullish

The FTSE 100 continues to follow a bullish order flow, trading above the 9-period SMA at $8,730. The price recently broke its previous structure and is respecting the four-hour support zone around $8,500, which serves as a strong demand area.
The Stochastic Oscillator remains overbought at 92.38, suggesting possible short-term consolidation before another move higher. As long as the price stays above this key support zone, the next upside targets remain $8,800 and $9,000. Traders utilizing forex signals may find opportunities within this setup.

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