The FTSE 100 psychological moved above the 7,600-resistance level last week as the leading UK index hit another new weekly high, marking its highest level in 6-weeks, and especially since the Ukraine crisis.
In terms of future upside targets, buyers are likely to target the current yearly high, around the 7,700 level this year, which is a huge upside barrier prior to the 8,000-resistance level.
The UK100 is leading in terms of performance amongst the major averages since the start of Russia’s invasion into the Ukraine, with the index on course for a massive 1,000-point recovery.
Still, very worryingly for traders looking for a correction, is sentiment. Traders are starting to turn bearish towards the UK100 at exactly the time it is looking its most bullish, and it fails to correct lower.
Sentiment towards the UK100 is very clear right now. According to the ActivTrader platform over 57 percent of traders are bearish towards the UK100. This is a drop since last week, but still worrying.
Typically, the retail crowd is on the wrong side of the trade more often than not, so the UK100 could continue to rise this week and month. Investors continue to ignore the conflict in the Ukraine, bur retail remain cautious.
UK100 Short-Term Technical Analysis
The four-hour time frame shows that the UK100 index has advanced back above the neckline of a large, inverted head and shoulders pattern, around the 7,600 level. The pattern is very good to define the short-term path ahead.
According to the overall size of the pattern, we can see buying ahead until me move towards the pattern objective, which is basically 7,750 resistance level.
UK100 Medium-Term Technical Analysis
The daily time frame shows that a large, inverted head and shoulders pattern looks to have formed. The pattern will be confirmed if we see the FTSE100 moving back towards the best levels of the year so far.
This looks increasingly likely as it surges towards the 7,650, with the 7,700 area with touching distance. I expect that the FTSE100 could even reach 7,750 or 7,800.