The FTSE 100 closed its weekly candle in the red last week as the leading UK blue-chip index remained to weigh down by banking and housing stocks, while mining giants, such as Rio Tinto, remained a drag on the FTSE100.
Still, the FTSE100 was able to claw back a significant portion of its mid-week losses, which was inspired by a huge move lower in US stocks due to the cryptocurrency market. FTSE100 bulls will take heart that the FTSE100 still close the weekly candle above the psychological 7,000 level, despite the sudden pullback.
Better-than-expected UK manufacturing PMI data, and bumper +9 percent retail sales figures from the United Kingdom economy from last month helped to lift the mood towards a second quarter rebound in consumer behaviour.
Travel and leisure related stocks are worth keeping an eye on this week, as some neighbouring countries are now open to UK travellers, and the UK could also see border restriction limits lifted with some European economies.
Looking at the week ahead, the emphasis is likely to be on the cryptocurrency market and gold. Stocks inside in the FTSE100 could see a boost if a rotation away from cryptos takes places. This could boost investors’ appetite for traditional, and less volatile stocks.
Miners are also worth paying to watch. If the price of gold continues to rise, and commodity prices continue to head higher, especially minerals, then miners listed within the FTSE100 could start to surge as profits may be coming in higher than expected.
Looking at the sentiment, traders are turning more bearish towards the FTSE100. This is a good sign, as slightly negative or heavily negative sentiment amongst the retail crowd may be needed in order for the FTSE100 to rally.
According to the ActivTrader platform some 58 percent of traders are bullish towards the UK100. The overall bias is still bullish; however sentiment is down by around 12 percent from last week.
UK100 Short-Term Technical Analysis
The four-hour time frame a head and shoulder continues to loom of the UK100 in the short-term. I suspect that this pattern is likely to be invalidated, as bears lost their chance last week to ignite it to the downside.
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 head and shoulders. Again, I think they will.
UK100 Medium-Term Technical Analysis
The daily time frame still shows that the UK100 is trading inside a large rising price channel between the 7,600 and 6,050 levels.
Given the mentioned development going on across the lower time frames the FTSE100 could be about to test towards the top of the price channel, around the 7,600 level over the coming days and weeks.