FTSE 100 Forecast: Showing Signs of Exhaustion

Christopher Lewis

 The FTSE 100 will be one of the bigger performers in 2021.

The FTSE 100 formed a neutral candlestick for the trading session on Wednesday, just as it did on Tuesday. Remember, we had that massive gap higher on Monday, and we may need to drop down towards that gap to fill it before continuing to go higher. In general, I believe this is a market that continues to see a lot of inflow, so I like the idea of buying the dips. The last couple of candlesticks just show that perhaps we got a little ahead of ourselves in such a short amount of time.

The 50-day EMA is also starting to get towards the gap as well, which could offer a bit of support. After that, then you have the 200-day EMA which is currently at the 6350 handle. This is a market that I think probably needs to retest the highs, and perhaps go looking towards the 7000 level. The one thing that is starting to work against the index would be the fact that the British pound continues to skyrocket, but at this point it is still relatively historically cheap, so I think it will probably be something you need to watch down the road, not necessarily right now.

Remember, the Brexit situation was a major anchor around the market, and now that we have gotten past that, it has put at least some sense of certainty into the British economy. Furthermore, we have seen massive amounts of inoculations in the United Kingdom, with over 14 million Britons receiving the first dose of the vaccination. In other words, people are starting to price in the idea of the UK recovery much quicker than other economies. With that in mind, I think that the FTSE 100 will be one of the bigger performers in 2021, and I think it is only a matter of time before we not only reach the 7000 level but break out above there as well. I have no interest in shorting this market anytime soon, and there will be plenty of people willing to jump into this market every time it dips because it should provide a bit of value. The upside thesis would be broken if we managed to slip below the 6000 handle. Until then, I think there will be plenty of buyers willing to get in.

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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