The FTSE100 (LSE: UKX) kicked off the week on a positive note after shedding 30 basis points in the prior week. Tuesday’s session was jampacked with U.K. economic data on its front end, with employment data in store.

U.K.’s unemployment picked up steam, landing on the 3.9% mark above consensus of 3.8%. The Claimant Count Change, which measures the number of people seeking unemployment benefits, rose to 46.7K, above expectations of a 15K decline. The growth in U.K’s unemployment could be an early indication of a moderating economy and a circumstance of the Bank of England’s (BOE) interest rate hikes. The BOE and FTSE100 traders will likely welcome this development and provide a platform for the index’s upside.

Technical

The FTSE100’s uptrend stalled with price retracing from its prior high point. The index found support at the 50% Fibonacci Retracement level at 7674.12 after rejecting resistance at the 7947.00 level. Due to the market’s buoyancy at the 7674.12 level, support at 7406.48 is unlikely to come into play immediately.

Given that RSI conditions point to oversold levels, the reversal from the 50% Fibonacci Retracement level will likely materialise, with bulls looking to the 7947.00 level as a point of interest. However, if bullish momentum fades, bears could come into the picture. A convincing break below the 50% Fibonacci Retracement level could entice bears to lower the index, with the 7406.48 level probable.

Summary

With China’s post-lockdown economic recovery intensifying questions of a probable recession due to its slower-than-expected progress, traders will likely be weary of piling into risk assets. In the short term, the 7947.00 level will probably come into play. However, risk assets could lose favour if a global recession does indeed shape up. The U.S. economic data for this week will provide further insight into the state of the world’s largest economy and whether a recession is imminent.

Sources: Office for National Statistics, Reuters, TradingView