The FTSE 100 index showed minor gains on Tuesday. At the start of New York session, the index was up only 3.3 points as the UK investors remained cautious despite a strong uptrend in the US equities. This benchmark index of UK stock market is underperforming compared to its counterparts from across the Atlantic.
It seems that the hawkish stance of the Bank of England to keep rates high for a long period, is weighing on the UK shares. Nevertheless, the market sentiment has still improved since last week as evident from the second consecutive green day for FTSE.
However, the index remains well below its 7,685 points resistance which needs to be broken to aim for more upside. There seems to be strong supply around this level and it won’t be easy to reclaim. As a result, while the Dow Jones index has soared to record highs, FTSE 100 index is still 5.37% down from its all-time highs.
A breakout above 7,685 points level on a high time frame could be a great buy signal but it is too soon to discuss that scenario. At the moment, the 200-day moving average is acting as a dynamic resistance. A breakdown below this moving average will put a deep pullback on the cards.
Technical analysis of the hourly chart reveals the support at 7,609 points level. A recent reclaim of this support suggests that the index may soon retest the previous high of 7,668 points. However, the long-term FTSE 100 index forecast will still depend on the breakout above 7,685 resistance.
In case of a pullback from current levels, there seems to be a lot of demand below 7,550 points which may act as a support. However, this level has been already retested multiple times which suggests there could be a higher chance of a breakdown on the next retest.