Should you buy the FTSE 100 after rallying more than 1% today?

UK stocks have started the trading week rallying. The FTSE 100 index rose by more than 1% – will the rally continue for the rest of the week?

Last Friday, the US stocks bounced from their lows in the last trading hours of the week. The move triggered a positive start to the trading week in Europe, where UK stocks gained more than 1% on the first trading day of the week.

Lately, the price action in the FTSE 100 index has been a bit of a rollercoaster. After failing to trade above 7,680, the index reversed sharply and dropped below 7,200.

But it made a reversal pattern there. A double bottom formed earlier this month, and UK stocks have rallied ever since.

So is FTSE 100 going to rally for the rest of the week? Or will investors fade today’s rally?  

Manufacturing and services data to move the stock market this week

The most important economic data to be released in the United Kingdom this week is the PMI Flash Manufacturing and Services data. The market expects the manufacturing PMI at 54.9 and the services PMI at 56.9.

Both are well above expansionary territory, and a bigger print, especially in the case of services, would push the stock market even higher.

FTSE 100 testing dynamic resistance

The FTSE 100 index is back at dynamic resistance with today’s move. It failed at it several times in the past month, and a break of the lower highs series would fuel the rally further.

From a technical perspective, the FTSE 100 index remains bearish while below dynamic resistance. However, its ability to bounce from the lows and its failure to make a new lower low on the last down move puts pressure on bears.

If US stocks maintain their positive momentum, the chances are that FTSE 100 will overcome resistance. All eyes are now on the 7,680 level, as a close above would trigger even more upside.