The FTSE 100 rallied significantly during the trading session on Thursday to break above the 6900 level. The 6900 level giving way to bullish pressure means that we will see the market go looking towards the 7000 handle. The 7000 handle of course is a large, round, psychologically significant figure that a lot of people will be paying close attention to and therefore I think what we will see is a little bit of profit-taking in that region, but longer-term I think we will continue to see momentum that comes in and push as this market higher.
Pullbacks at this point should continue to see support at the 6800 level, where we had formed a couple of hammers in a row and then took off. That was a nice signal as it was a retest of previous resistance, in the form of the ascending triangle. That being said, it should now offer a hard “floor the market.” If we do break down below there, there are plenty of other things that could come into play for support as well. There is a huge gap underneath, and then of course you have the 50 day EMA that is sloping right up along with the uptrend line from that ascending triangle.
If we can break above 7000, and I think we will rather quickly, the market is likely to go looking towards the 7200 level as the FTSE 100 has a habit of moving in 200 point increments. Because of that, I think we will see this market show itself as being stringent and strong, as the United Kingdom is likely to see the benefit of the vaccination drive opening up the economy quickly and bring in profit into British companies. Furthermore, the Bank of England will clearly keep the markets liquefied, as stock markets tend to move on cheap and easy money more than anything else these days.
The size of the candlestick on Thursday of course is very bullish, and although we did not close at the very top of the range, we closed close enough to tell me that there are going to be traders out there looking to short the market higher, as there should be plenty of follow-through at that point. Ultimately, I like the idea of looking at these dips as a potential buying opportunity.