The FTSE 100 gapped lower to kick off the trading session on Friday, and then plunged towards the 6600 level. This was an area of support that I had mentioned previously as a potential destination, but I think that it is a bit difficult to imagine that the move down to that level would have happened so quickly. Nonetheless, we have gotten there and that is all that matters. We have turned around to form a rather bullish candle by the end of the day though, so at this point I think we are going to continue to see quite a bit of resiliency.
The 50-day EMA underneath has used its influence to form a bit of an uptrend line, and it looks like we probably will turn around to try to fill the gap that formed at the open on Friday. The real question is whether or not we can break above there and continue to go much higher. The 6800 level has been important more than once, so I think it would not be surprising at all to see it continue to offer a huge fight. I do think that eventually we will probably continue to go to the 7000 handle, but it is going to be very difficult to get there. That is a large, round, psychologically significant figure, but it is also an area in which there would be a significant amount of options pegged, so I think it probably will continue to cause quite a bit of noise.
The alternate scenario is that we break down below the 50-day EMA, and then the market could very well go down towards the 200 day EMA, which would be a bit surprising but not necessarily impossible. At the 200-day EMA, which is sitting at the 6400 level, I would anticipate seeing a lot of buyers and a significant uptrend of finding technical support for the uptrend in general. On the other hand, if we break above the 7000 handle, that will kick off the next major leg higher in this market, which will move right along with risk appetite when it comes to not only the United Kingdom, but the world in general.
