The FTSE 100 pulled back slightly during the trading session on Wednesday only to find buyers again to push towards the same 6800 resistance barrier. This is an area that has caused a bit of trouble over the last couple of weeks, and now it looks like we are doing everything we can to break above it. You will notice that if you look towards the beginning of the year, we had broken towards the 6900 level before pulling back rather sharply.
The shape of the candlestick is a bit of a hammer, but if we were to break down below it, that technically makes it a “hanging man”, which is a negative candlestick formation. Even if we do break down below there, I think that the 6600 level is going to offer a “hard floor” in the market, as it has not only shown support previously, but has also the added benefit of attracting the 50-day EMA now. With that in mind, I do believe that a lot of value hunters are simply looking for some type of opportunity to get long the FTSE again.
We are struggling a bit, so this should not be a huge surprise to think that we are having resistance at an area that previously has been important. However, I do think that it is only a matter of time before we grind towards the 6900 level, and as soon as we break above there the market will almost certainly be looking towards the 7000 handle. With that in mind, the 7000 level will be psychologically important and most certainly will have people paying close attention to the FTSE itself.
Keep in mind also that the British economy is set to do a little bit better than some of its neighbors via the vaccination program that they have launched. In other words, the economy can probably open up much quicker in Britain than it can in places like Belgium, France, or even Germany. In comparison, the FTSE 100 could become a leader in that part of the world, as the signaling of the death of the United Kingdom was a little bit premature from the old Brexit days. At this juncture, I do not have any interest in shorting this market.
