The FTSE100 (LSE: UKX) is on track to close a second consecutive week lower, with a 1.85% week-to-date loss in the frame. The commodity-linked stocks dragged the index lower as China, the second biggest commodity importer after the U.S., revealed weakening activity in the manufacturing and services sectors. 

The U.K.’s exit from double-digit inflation was not enough to support the FTSE100, as the Bank Of England expects further tightening in their aim to lower inflation to a 2% target. The U.K. economy has also given mixed signals, with the manufacturing and services PMIs contracting more than expected while retail sales picked up steam. Will the FTSE100 find support after the latest selloff?  

Technical 

The FTSE100 has been confined to support and resistance at the 7333.00 and 7947.00 levels, respectively. A recent surge saw the market approach and reject the resistance level, taking price action into a downtrend as traders hunted for the support level. The breakdown below the 100-day moving average and 61.80% Fibonacci Retracement Golden Ratio validated the downtrend.  

A reversal is possible since the price now trades near the support level in oversold Relative Strength Index territory. If they commit to the upside, bullish traders will likely look to the 7974.00 level as a point of interest.  

Alternatively, a breakdown below the 7333.00 level could indicate that bearish momentum has a stronghold over the market. Bearish traders will likely view the 7209.00 swing low as the next point of interest.  

Summary 

This week, the U.K.’s manufacturing PMI strengthened and will likely support the Pound at the expense of the FTSE100. The release of U.S. PMIs and labour market reports will probably mould risk sentiment. If data points to a bullish Greenback, risk appetite and trading could flow toward the Greenback, given that the possibility of an interest rate hike prevails. The 7333.00 level could come into effect if selling pressure continues. 

Sources: Reuters, NASDAQ, TradingView