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The FTSE100 has started to break above the 7,500 level, meaning a huge number of shorts are probably being squeezed and caught off guard right now. In this circumstance, the up move can continue.
Stocks across Europe moved higher after Beijing’s National Health Commission pledged to ‘accelerate the increase in the vaccination rate for people over the age of 80 and continue to increase the vaccination rate for people aged 60-79’.
China’s low vaccination rates, particularly among the older population, have long been seen as prolonging Beijing’s no-tolerance approach to Covid, with even small caseloads met with harsh lockdowns and quarantine.
The vaccine news comes as China’s major cities of Beijing and Shanghai were blanketed with security on Tuesday in the wake of nationwide rallies calling for political freedoms and an end to Covid lockdowns.
Sentiment is again very bearish, which could be great for further price gains ahead for the UK100. With retail looking to short we could start to see the UK100 nudging above 7,500 this week.
If we look at the ActivTrader Market Sentiment tool then 80 percent of traders are currently bearish. Again, this hints that retail is being hugely squeezed as the break accelerates.
Based on the current sentiment reading I think it is highly probable that we could see the upside starting to accelerate.
UK100 Short-Term Technical Analysis
According to the four-hour time frame the UK100 has invalidated a head and shoulders pattern. The invalidation is still very premature, so more upsides does make sense.
The size of the invalidated pattern implies that we are about to see a move to upside of over 200 points if we start to break the 7,500 level. I would suggest keeping a close watch on the 7,500 level as 7,650 could incoming.
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UK100 Medium-Term Technical Analysis
The daily time frame shows that the UK100 is edging back towards the top of its price range, and a move towards the 7,600 level would help form a huge inverse head and shoulders pattern.
If we see the UK100 starting to move towards the 7,700 to 7,800 area, then the all-time is within touching distance. All eyes will be on a huge break above this year soon.
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