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The FTSE 100 has recovered back above the 7,200 level, as the index staged a big recovery from the worst levels of the month and activated a large, inverted head and shoulders pattern.
With the leading UK index finding strong buying interest above the 7,200-level technical analysis is clearly highlighting that the 7,500 level could be the next bullish target for FTSE100 bulls.
Another positive factor UK stocks is the fact that other major global indices are rallying sharply as well. Despite the promise of QE being reduced, stock markets continue to build upside momentum.
UK stocks are all buoyant due to positive jobs data from the UK economy, following the release of the September jobs report which showed the greatest number of jobs openings this decade.
This week CPI jobs report is going to be very important for how traders view the Bank of England’s rate path this year. A strong number could spook UK housebuilding stocks but propel banking stocks higher.
Sentiment towards the UK100 is also looking more conducive for bullish and has drop considerably since early week trade. According to the ActivTrader platform some 81 percent of traders are bullish towards the UK100.
This could be extremely bullish for the UK100, given that retail traders tend to lean against the overall trend. Both the short and medium-term trend is bullish for the UK100.
UK100 Short-Term Technical Analysis
The four-hour time frame shows that the FTSE100 has shown that bulls have ignited a large, inverted head and shoulders pattern intact as buyers broke through the 7,200-resistance level.
It should be noted that this pattern holds a massive 300 points of upside potential if activated, which would take the FTSE100 towards the 7,500-resistance area.
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UK100 Medium-Term Technical Analysis
The daily time frame shows that the UK100 remains trading inside a large rising price channel, with the price now close to the top of the pattern, rather than the bottom of the pattern.
A move towards the 7,500 level could be on the horizon medium-term if bulls can hold the price above the 7,200 area. As the pattern is rising, the index could eventually top out around the 7,550 area.
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