FTSE 100 Forecast: Index Bounces from 50-Day EMA

Christopher Lewis

There should be a huge “pop” in the overall performance.

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The FTSE 100 has fallen significantly during the trading session on Monday to reach down towards the 50-day EMA. We have bounced quite nicely from there to form a hammer, showing that there are buyers willing to step in near this gap and turn this market back around longer term. The 6600 level being broken to the upside would be a very bullish sign, allowing the market to go back towards the highs again. This is a market that is moving based upon the idea of the UK economy reopening and the strong inoculation program that has been going on in that country.

The idea, as traders will tell you, is that the economy will break out and continue to strengthen from a very low floor. In other words, there should be a huge “pop” in the overall performance. The market breaking the bottom of the candlestick would be negative, and that could open up a move down to the 6400 level, possibly even the 6285 level where we have seen a lot of support.

Furthermore, if we break out to the upside, the market could go looking towards the 6750 handle, and then open up a move towards the 6900 level. This is a market that has been strong for quite some time, so it should not be a surprise to see this market pull back and then go higher. The question now is whether or not we can break out to the upside and continue to go higher.

We recently had the “golden cross”, which is a technical indicator that a lot of people like. At this point, we are likely to see longer-term traders continue to hold on to this trend as well, but in general I believe there is a strong likelihood that people will look at these pair of hammers being formed as a sign that we should go higher. In fact, a “double hammer” set up right here is about as good as it gets. If we have more of a “risk on move” for the trading session on Tuesday, it would help this market as well. As PM Boris Johnson has suggested, there are going to be certain businesses allowed open in the next few weeks, which also has people looking towards the future for the United Kingdom.

FTSE 100 chart

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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