I am looking for some type of supportive candle in order to get long of the market that has been very bullish until the last couple of months.
The FTSE 100 initially tried to rally during the trading session on Friday but then fell back from the 6600 level to finally fill the gap that I mentioned yesterday. Now that we have filled the gap and the 50-day EMA sitting underneath is starting to curl higher, it is very likely that it is only a matter of time before we see buyers jump in and push this market to the upside. With that in mind, I am looking for a supportive candlestick or some type of bullish candlestick in order to get long yet again. This being the case, I think that what we are looking at is a move towards the highs earlier this week which are closer to the 6750 handle, and then possibly to the 6900 level.
One of the things that is causing a bit of noise in the FTSE 100 is the fact that the gilts are starting to offer better returns as far as yield is concerned. The higher the yield, the less likely people are willing to step out on the risk curve in order to invest. Furthermore, the British pound has skyrocketed a bit during the trading session, so that works against the value of the export market as British goods become more expensive.
Longer term, I do believe that the UK economy will continue to strengthen, because it has been battered so hard for several years. We had been pricing in the apocalypse, which seems to have avoided it via 14 million vaccinations for the coronavirus pandemic, and all of the lockdowns that the UK had endured. With this, it is likely that the United Kingdom will recover much quicker than many of its G-10 counterparts, thereby making the United Kingdom much more attractive.
To the downside, even if we were to break down, I believe that the 200-day EMA, which sits at the 6350 handle, is probably going to offer a significant amount of support, assuming that we even get down that far. I am simply looking for some type of supportive candle like a hammer or something along those lines in order to get long of the market that has been very bullish until the last couple of months. We are eventually going to go looking towards the 7000 handle going forward.