Is It Time to Purchase UK Stocks? Charts Indicate Potential Rally

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  • An ascending triangle formation suggests higher zones for FTSE 100 index.
  • Soaring inflation boosts stock markets.
  • The ascending triangle’s projects move suggests advances towards 8,400.

The United Kingdom endured the impacts of the Ukraine war, together with the Europe continent. Soaring inflation is also a shared theme between the UK and the European Union during these distressing times.

However, despite the woes in the financial space this year, the stock market hovers around yearly peaks. The FTSE 100 retests horizontal resistance, and breaking it will complete an ascending triangle formation, confirming further upsides in the coming sessions.

UK 100 Struggles Near Horizontal Resistance

An ascending triangle represents a continuation setup. Meanwhile, its primary characteristic is a horizontal level that ensures resistance for some time until the market gains the strength to overcome it.

The ascending triangle setup ends whenever the market breaks beyond resistance. Technical investors leverage its measured move to predict the possible advance that usually follows.

Investors project the triangle’s longest part higher from a horizontal resistance to gauge it. In FTSE 100 context, the measured move’s length is around 800 points. Therefore, projected from horizontal resistance at 7,600 gives 8,400 points as the possible target.

Inflation Boost

Inflation means soaring prices of services and goods over time. Global central banks have financial policies to regulate inflation levels. Most leading banks target given inflation levels; high to prevent deflation cases and small to affect economic activity.

However, creating sustainable inflation has been challenging, and most banks could not keep to the 2% common target. That isn’t the narrative anymore. The response to COVID inflated prices within advanced economies to unimaginable levels. Furthermore, the Ukraine war catalyzed supply chain issues, amplifying inflation.

Economists predict double-digit inflation figures for the UK towards 2022 end. Generally, heightened inflation weighs on local currencies while fueling stock markets. Thus, the FTSE 100 can easily climb past horizontal resistance, considering the soaring inflation. A move beyond 7,600 will welcome run-ups to 8,400.

What are your thoughts about the current economic picture? You can leave a reply in the comment section below.

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