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The UK100 started the new trading week in spectacular fashion as the index rapidly recovered from the 6,300 level, marking a 200-point gain on Monday. A broad-based rally in mining stocks helped lift the FTSE 100 from the doldrums.
Last week the leading UK index had come under pressure as fears over the Reddit debacle on Wall Street spooked financial markets, causing US indices to infect European equity markets with bearish sentiment.
A rally in UK housebuilders also lifted the FTSE100 yesterday as the mortgage market in the United Kingdom remains hot, despite the UK economy being in the midst of a draconian lockdown, which is officially now the third such lockdown since the start of the pandemic.
Another major increase in silver prices on the Monday market open was seen as being bullish for the UK miners. The UK100 index has several big-name miners listed inside the index, and the FTSE100 does usually receive a boost when mining stocks rally in tandem.
Aftershocks from the exploits of retail trading forums still have the ability to weigh on the FTSE100 this week, however, the UK100 has recovered towards its 50-day moving average, at 6,520, and remains well above its 200-day moving average, at 6,200.
Without a doubt the recent multi-week pullback has given traders a jolt who are bullish towards the FTSE100 and expected a straight run towards the 7,000 level, following the powerful December 2020 breakout.
If the index can start to gain even more upside traction this week above its 50-day MA then the technical will start to get back-on-track. It now remains to be seen whether Wall Street revolt will continue in the short-term and negatively impact global equity markets.
UK100 Sentiment Analysis
The Market Sentiment indicator on the ActivTrader platform currently shows that some 72 percent of traders are bullish towards the FTSE100 right now. Bulls have been on the right side of the trade so far this week and should be congratulated.
The market skew is starting to get a bit too one-sided, so a pullback may be expected. I personally am watching the sentiment reading here very closely as short-term gauge of where the index may be headed next.
Source by ActivTrader.
UK100 Technical Analysis
Lower time frame analysis shows that the 6,500 level is the key resistance area that FTSE100 bulls need to break through this week. A bearish breakout from a falling price channel took place last week, sending the UK100 reeling, and reaching the overall downside price target of the price channel.
Source by ActivTrader.
Going forward, FTSE 100 bulls need to move price back inside the channel, at 6,500 and steadily get back above the 50-day moving average, around 6,520. Other big upside levels to watch this week are found at the 6,585 and 6,650 level.
Medium-term analysis continue to show the FTSE100 trapped inside a huge rising price channel between the 5,750 and 7,150 levels. Personally, I am execting bulls to attack towards the top of the price channel if they can crack the current yearly high this month.
Source by ActivTrader.
