The FTSE100 (LSE: UKX) was in the positive for a third week in a row, despite last week’s 1.50% gain being the lowest in the three weeks. Risk on sentiment drove the index higher as the Banking Sector’s panic subsided while the world’s largest economy slowed down, providing relief to risk tolerant traders.

Supporting the upward momentum this morning is the BRC Retail Sales Monitor, which came in stronger-than-expected at 4.9% Year-on-Year compared with 4.2% consensus. Traders will look to the U.K. Goods Trade Balance and GDP Month-on-Month, due on Thursday, to determine the health of the British economy and the Bank of England’s Policy outlook.

Technical

The FTSE100 has exceeded its 100-day moving average and crossed above the 61.80% Fibonacci Retracement Golden Ratio in its progress in undoing the downtrend. Support and resistance were established at the 7211.85 and 7876.75 levels, respectively.

With bulls in the driver’s seat, the 7876.75 is a probable target for bullish traders if they commit to the short to medium-term upside.

Alternatively, with price action approaching resistance and the RSI pointing toward overbought conditions, bearish traders will likely be enticed to enter the market and short from the resistance level. Bearish traders will probably look to the 7211.85 level with interest if they lower the index.

Summary

Traders will look for cues from the globe’s biggest economy, the U.S., with critical inflation data due this week likely shaping the interest rate outlook. If inflation slows, future rate hike expectations could subside and bring favour to risk assets as bond yields and the greenback potentially decline in the medium to long term. However, the FTSE100 will likely consolidate ahead of the key economic event, making the Golden Ratio and 7876.75 a probable range.

Sources: Reuters, TradingView