The FTSE 100 pulled back slightly during the trading session on Tuesday to take out about half the gains for Monday. That being said, this is a market that has recently broken out of a major ascending triangle, pulled back to test that triangle, and then rallied again. This is a perfect technical setup, so at this point it comes down to whether or not we can take out that massive red candlestick that sent the market down to retest that 6800 level.
The 6800 level is backed up by the 50-day EMA and the uptrend line underneath, so really at this point I think it is very difficult, if not impossible, to start shorting this market as it looks so bullish. Keep in mind that the FTSE 100 is being thrown around by the reopening trade, or perhaps even the lack thereof, depending on the day. The FTSE 100 will also be influenced by the British pound, and whether or not it is rising or falling at times. Nonetheless, most traders out there are focusing on the bullish reopening case, so the FTSE 100 should rally right along with several other Western indices.
The FTSE 100 is probably losing a little bit of volume to other places like the S&P 500, which is obviously a very bullish market, and it may be a bit of a laggard. Nonetheless, this is a market that has enough support underneath that I think dips will continue to be thought of as potential buying opportunities. If we can break above that 7000 level above, that opens up a potential move to the 7300 level, based upon the measured move of the ascending triangle, as it is the height of that pattern.
I do think that there might be a lot of noise between now and the breakout above the 7000, but clearly that is an area that people will be revisiting sooner or later, as large figures like that do tend to take a lot of attention from the market. My trigger for buying even more will be a daily close above that 7000 handle, as we have seen a couple of exhaustion candles form just below there. That would be a breakout not only of physical resistance based upon these candlesticks, but also psychological resistance.
