The FTSE 100 has fallen significantly on Friday, only to turn around and show signs of life again. Because of this, the market is likely to continue seeing value hunters jumping into the market, as the 7200 level should continue to offer plenty of interest. After all, it was the top of the overall consolidation area that the market had been stuck in for what seems like a lifetime. Underneath, even if we did break back into that range, the 50-day EMA is starting to attract a lot of attention near the 7100 level as it is curling higher, so I think that is your next support level.
Forming a hammer during the trading session is a good look, and I think it will eventually send this market to the upside. Breaking above the top of the candlestick opens up the possibility of reaching towards all-time highs again, which are sitting just above. I would not be surprised at all to see this market break out above those highs over the next couple of days, but it might be a little bit noisy as the FTSE 100 has to deal with a lot of noise from the global reopening trade. The United Kingdom is a place that a lot of people are concerned about suddenly, mainly due to the noise from the fishing problems between France and the UK, as tensions are increasing. At the end of the day though, there is going to be no war and pullbacks are simply going to be thought of as gifts down the road.
I believe that this market is going to try to make the measured move of 400 points from the breakout, as the previous rectangle was the same height. That would have this market looking towards the 7600 level, but that does not necessarily mean that has to happen quickly. After all, look how many times we bounce back and forth over the last several months in that same range, as the FTSE 100 tends to chop around quite a bit. The FTSE 100 does look very bullish though, so I have no interest in shorting and I do think that longer-term traders will continue to put money to work.
