The FTSE 100 moved back towards the 7,600-level last week, as bulls took another look at the yearly high, and the key technical zone they have not been able to break since the 2020 recovery began.
Two things are every clear right now. Firstly, the FTSE100 is not spooked by the rumours that Boris Johnson could face the axe as UK PM, and also that the UK100 is the leader in terms of gains compared to European indices.
In fact, the price action for the FTSE100 look downright bullish compared to the GER40 and CAC40, which are current some ways off their respective yearly trading highs compared to the FTSE100, which is just 100 points away from the highs.
Additionally, the US stock meltdown has not been severe on UK stocks, Usually, if the USA comes under pressure then the FTSE100 wilts, however, this is not currently the case and could speak to the relative undervaluation compared to UK and USA stocks.
In terms of how high the FTSE100 can go we need to take a closer look at the 7,500 level. It is possibly the most important psychological resistance aside from the 7,600 level. This is the weekly pivot for me.
The markets mood could quickly turn, and with the current backdrop of US tech stocks getting crushed, I would not be surprised to see the 7,500-level become a struggle this week for FTSE traders.
Sentiment towards the UK100 is starting to get one-sided. According to the ActivTrader platform over 70 percent of traders are bullish towards the UK100. This is an increase in bullish sentiment of some 40% this month.
With these type of sentiment skews, it does allude to the fact that retail is getting hurt being long, hence we could easily see a push under the 7,500 level this week.
UK100 Short-Term Technical Analysis
The four-hour time frame shows that a potential double-top price pattern has formed, following last week’s big technical rejection from the 7,600 to 7,620 resistance cluster.,
The 7,380 level offers strong support on any moves lower and could set up the prospect of buy a dip in the FTSE100 if we see a big price rejection above or around the 7,000 zone, which is the bottom of the four-hour range.
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UK100 Medium-Term Technical Analysis
The daily time frame shows that the FTSE100 has failed twice at the top of an extremely large triangle pattern this week. Bulls now look to be targeting towards the top of the pattern for a confirmed breakout to new all-time high.
It should be noted that the top of the pattern sits around the 7,600 level. If the top holds then a massive technical reversal could take place, or indeed a bullish break could be a bullish breakout or reversal with at least 800 points of directional potential.
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