The FTSE 100 pulled back a bit during the trading session on Tuesday to reach down towards the top of the ascending triangle that I have marked on the chart. The 6800 level has been tested a couple of times and has held true so far. That is a bullish sign, so I think traders will like the idea of buying this dip and perhaps try to push towards fresh, new highs. This is a classic “breakout and retest” type of trade, so it should not be a huge surprise that we have seen so much resiliency.
The FTSE 100 will be a favorite destination for a lot of traders, due to the fact that the United Kingdom has put itself on course to open much quicker than some of its peers. That is a good sign, and a lot of people will look at that as reason enough to believe in the UK economy. As long as that is going to be the case, the FTSE 100 will be a strong performer. Furthermore, there is so much in the way of cheap money flowing around the world that people are simply looking for reasons to get ahead of any type of inflation.
To the upside, I believe that we do have a little bit of a fight on our hands, but if we could break to a fresh, new high, then it is likely that we would see the market go looking towards the 7000 handle above, which is a large, round, psychologically significant figure and something that would attract quite a bit of attention. I think this is a scenario where we would see a lot of money trying to get involved, as it so obviously bullish. Furthermore, even if we broke down, I think there is plenty of support underneath at the previous uptrend line, as it is backed up by the 50-day EMA. In fact, I do not necessarily have a scenario in which I am looking to sell the FTSE 100, at least not anytime soon. With that, I like buying dips, something that we have seen work out the last couple of days in a row, but now all we need is a little bit of follow-through to make that really stick.
