The FTSE 100 has rallied a bit during the trading session on Wednesday as we continue to see the 50 day EMA offers support. Furthermore, the 6600 level seems to be supportive as we have seen buyers come into this market for days in a row now at that same level. Because of this, the market seems likely to see a lot of volatility, but at the end of the day it is a market that certainly seems to be supported based upon the recent action.
Looking at the FTSE 100, you can see that the market has been in an uptrend for a while, before jumping into the most recent phase. The most recent phase is more or less a consolidation area, but we have seen “higher lows” within the consolidation area, so it looks like we are trying to build up enough momentum to finally break higher. The 6800 level of course is a major resistance barrier, and a short-term target for buyers to get involved. The 6800 level of course has seen sellers jump in recently, but that pullback has been met with a significant amount of buying and we had formed three hammers in a row, it is pretty rare that forms, and therefore I think it is likely to see movement into this market to the upside again.
All of this makes sense due to the fact that the UK economy is set to be stronger than some of the other nearby economies as the vaccination program has done so much better there. With that being the case, I think that the FTSE 100 will continue to attract a lot of attention in that part of the world and therefore I like the idea of buying on short-term dips as it has worked multiple times over the last week or so. If we can finally break above the 6800 level, it is likely that we could go looking towards the 6900 level which was the most recent peak high. After that, then I think it is only a matter of time before we get to the 7000 handle which is my longer-term target.
As far as selling is concerned, if we were to break down below the 6500 level, then it is likely that we could go down towards the 200 day EMA which is just above the 6400 level.
