The FTSE 100 price may soon overcome a significant technical barrier. And if this happens, the UK share index could make a new 2021 high.
The FTSE 100 is higher by 40 points and, at 7,014, looks on track to finish the week back above the psychological 7,000.
The FTSE started this week firmly on the backfoot. On Monday, the index slumped to its worst day in 6 months as fresh COVID-19 fears rocked risk assets.
However, on Tuesday, the FTSE 100 price staged a reversal, and this morning has finally recouped all of Mondays -2.49% decline.
Furthermore, the UK share Index has reclaimed the 100-Day Moving Average at 6,964.80 and is on its way to climbing back into its uptrend.
UK Share index outlook
The daily chart highlights Monday’s destructive price action. The decline forced the index below the support of a rising trend line at 6.990, leading to an acceleration of selling as the 50 DMA was breached.
However, after briefly piercing the horizontal support of the 13th of May 6,818.40 low point, the market reversed the sell-off. Subsequently, the three-day rally coming into today has improved the technical backdrop. However, for the rally to be confirmed, it must recover the former trend line support.
The FTSE 100 price has tested the rising trend line for the last three days. Although, the price is so far respecting the resistance level, which now sits at 7,011.
A clearance of this resistance targets the 50 DMA at 7,060.8, followed by a descending trend line at 7,100. Furthermore, a close above 7,100 will have the bulls aiming for a new 2021 high.
However, investors should exercise caution if the price fails to hurdle 7,011 by the end of play today. This could result in the FTSE 100 price losing the support of the 100 DMA at likely initiate a return to Monday’s low.