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The FTSE 100 closed the week comfortably above the 7,000 level after suffering another volatile trading week due to fears over rising global inflation, which continues to drive fears about central banks raising rates sooner than expected.
This week it may be prudent to keep an eye on big cap miners inside the FTSE100 as miners such as Rio Tinto and Glencore struggled to recover last Friday, and this continues to weigh on the benchmark UK100.
Iron ore and copper prices turned lower towards the end of last week over fears about slowing global growth. The FTSE100 is heavily influence by big cap miners, which make up a significant portion of the leading UK index.
Mining stock traders also reacted to the news that the Chinese authorities have fears about the recent steep rise in iron ore and copper, amidst huge output increase from the leading Chinese steel mills.
On the positive front, the German DAX and the CAC40 are posting strong gains and remain in an uptrend. Historically, if European stocks are rising then it tends to spill over to UK stocks.
Pubs, restaurants and other hospitality venues in the UK are set to resume indoor activities on today, following months of lockdown and general restrictions from the government due to COVID-19.
This is worth noting this week, as optimism towards the UK economy could ramp up a notch, despite broad-based concerns from the incumbent Conservative party surrounding the Indian variant of the Covid-19 virus.
According to the ActivTrader platform some 70 percent of traders are bullish towards the UK100. The overall bias is now fairly large, so it is a concern to me. We may need to see sentiment neutralizing in order for the FTSE100 to continue to advance.
UK100 Short-Term Technical Analysis
The four-hour time frame a large, inverted head and shoulder that holds a 300 points of downside potential has formed, and continues to loom of the UK100 in the short-term
According to technical analysis, the index could rally towards the 7,450-resistance zone over the short-term if bulls are able to invalidate the historically bearish price pattern. A move under the 6,800 level is required to ignite the pattern to the downside.
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UK100 Medium-Term Technical Analysis
The daily time frame shows that the UK100 is trading inside a large rising price channel between the 7,500 and 5,950 levels.
Given the mentioned development going on across the lower time frames the FTSE100 could be top of the price channel, around the 7,500 level.
Furthermore the 50-day moving average has crossed over the 100-day and 200-day moving average again, which continues to be providing a strong buy signal on the daily time frame.
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