UK100 has recently touched its long-term uptrend line, bounced up twice from the line and formed a potential double bottom pattern. We can see that price has touched this uptrend line many times in the past and then reversed by forming reversal patterns. Therefore, we will be looking for buy opportunities at this stage.
Our task now is to wait for a neckline breakout of the double bottom, which is the criteria for a reversal. Once price breaks the neckline, we will put buy limit orders at the neckline to capture the pullback. Our first target is the previous high from where the price has fallen, which is the 7650 level. We can see from the past reversals that when price jumped from the trend line, they all retraced back to the previous high.