The FTSE100 (LSE: UKX) is down 0.51% week-to-date and is on track to close a third consecutive week with a loss, making it only one week of gains in a seven-week selling spree.  

The U.K.’s sticky inflation has prompted the market to expect further rate hikes as the 2% target remains far off from the 8.7% inflation rate. Therefore, borrowing costs are expected to keep moving north, putting pressure on earnings potential. Further weighing on the exporter-oriented FTSE100’s weakness was China’s downbeat balance of trade. China’s imports declined by 4.5% for the month, continuing a downward trend, signalling that the massive commodity importer has experienced a slowing economy.  

Technical 

The FTSE100 has been subdued within a downtrend, following the price breaking below the ascending triangle pattern and the 100-day moving average. Resistance was established at the 7793.92 level following a sharp downturn from the level. Support was established at the 7444.40 level after a rejection of the level pushed the index higher. The 61.80% Fibonacci Retracement Golden Ratio level established a dynamic resistance level from which the market has reversed. 

If downside momentum persists, bearish traders will likely be eying the 7444.40 level as a point of interest. Alternatively, a high volume breakout above the Golden Ratio at the 7660.40 level could expose the market to the upside, with the 7793.92 level likely earmarked as a point of interest.  

Summary 

The 7660.40 level will likely be a pivot for the bullish or bearish sentiment on the FTSE100. With the U.S. Interest rate decision looming, the FTSE100 could experience a jolt in volatility if the decision surprises. If a hike is implemented, markets could turn risk-off and search for higher yields in the U.S. Treasury bonds and Greenback. If a pause is implemented, the FTSE100 could gain as risk appetite picks up steam.  

Sources: Reuters, TradingView