FTSE 100 Index Turns Green For Sixth Day In A Row

Summary:
• FTSE 100 Index: The benchmark index of UK equities has surged to its highest level since May 2023. I expect a pullback from 7,687 in coming days.

The FTSE 100 (INDEXFTSE: UKX) Index has been constantly gaining strength since its July lows. The index has broken above the key level of $7,650 and is now aiming for more upside. The benchmark of UK equities now stands at its highest level since 24 May 2023.

On Tuesday, the constituents of the top UK benchmark extended their gains. This also resulted in another increase of 7 points in the FTSE 100 index, which turned green for the sixth straight day in a row. This translates into a 6.3% increase from monthly lows.

Why Is FTSE 100 Index Rising?

The ongoing bounce can be attributed to a lot of factors. A major factor is the recent decrease in UK inflation which dropped to 7.3% in June 2023. As a result, the markets are expecting BOE to take a less hawkish approach toward more rate hikes.

Another reason behind the rising FTSE 100 index is the recent surge in oil prices. The rally in oil prices has increased the prices of energy stocks which are part of FTSE 100 companies. A significant decrease in the US & UK inflation has boosted investor confidence.

FTSE 100 Index Retests Critical Resistance

As evident from the following chart, INDEXFTSE: UKX fell below its key support of 7,300 in July. After a strong rebound, the index has broken above the June high of 7,687. This is a strong resistance level and is unlikely to be broken on the first attempt.

The FTSE 100 index forecast will flip very bullish if the index gains strength above June highs. This week’s FOMC meeting in the US may result in a short-term pullback. Another break below 7,300 points level will confirm the bearish thesis to aim for more downside.

I accurately predicted the rejection of the British index from the 7,900 level in multiple forecasts. Therefore, you’re welcome to follow me on Twitter for my updated analysis of the index.