The FTSE 100 initially pulled back on Wednesday to find the 50-day EMA as support. The market has now turned around to break above the 6600 level, which is a bullish sign in and of itself. The hammer from the Monday session and the now “inverted hammer” from the Tuesday session further signifies that there are buyers willing to push this market higher, and as a result I think it is only a matter of time before we would see a challenge to the shooting star that peaked at the 6750 level last week.
Keep in mind that the UK has roughly 25% of its population inoculated, at least the first part of the sequence of shots. That is far ahead of many of its rivals, and therefore we may be seeing a bit of money flow into the United Kingdom based upon that alone. Clearly, we have seen the British pound take off to the upside as a result, so we do have the ability to see this market go much higher, as the once-feared Brexit situation has seen itself appear in the rearview mirror, and with a lot less damage being done to the United Kingdom that people had anticipated. In fact, you could even go so far as to say that the United Kingdom is in the driver's seat when it comes to a lot of economic growth with its jump on the vaccination process.
To the downside, even if we do break down below the 50-day EMA, I think the 200-day EMA racing towards the 6400 level will offer a bit of a “floor in the market” as well. I think that the buyers will be willing to jump in and pick this market up, but I still hold quite a bit of hope for not only buyers to come in and pick this market up on dips, but for a move towards the 7000 level over the longer term. This does not necessarily mean that we will get there overnight, but I do think that is a destination that a lot of people will be aiming for. With that in mind, I like this market, and have absolutely no interest whatsoever in shorting it. If we can break above 7000 then we can go much higher.
