The FTSE 100 has fallen a bit during the trading session on Thursday to reach down below the 6600 level for the first time in several weeks. However, we have also turned around to show signs of strength again, ending up acting as it has over the last several sessions. At the end of the day, we have formed a hammer yet again, which would be five out of the last six days doing so. Ultimately, this tells me that there is a lot of support underneath this market, and therefore it continues to look bullish for what I can see.
Looking at the 50 day EMA sitting at the 6600 level, you can see that there would be a lot of technical support on the charts, which had the added benefit of previously been both support and resistance, so there is a certain amount of “market memory” at this point as well. In other words, the fact that we continue to bounce from this area just as more “fuel to the fire” for the idea of going long.
Even if we do break down below here, I think there is significant support underneath at the 6500 level, and then again at the 200 day EMA underneath there. I do believe that it is only a matter of time before the market will find buyers, but I think we are more likely to go higher before we go lower, and therefore I think that the 6600 level continues to function as a “short-term floor” in the FTSE 100. Based upon the technical analysis, this could be the beginning of another move to the upside and perhaps even looking to target the 6800 level that has been the most recent resistance barrier. Breaking above their opens up the possibility of the 6900 level, followed by the 7000 level which is my longer-term target.
The British pound has been drifting a little bit lower as of late, so that does help the idea of exports, and of course the UK economy has done a good job of surviving the onslaught of closings. Beyond that, the vaccination program in the UK has been rather robust as well, so that is another thing that a lot of traders will be paying attention to when picking which stock market to put money in.
