The FTSE 100 pulled back during the trading session on Monday but found plenty of support at the area where we had broken out from. The 6800 level is of course a large, round, psychologically significant figure, and an area where we had broken out from. By doing so, we have “retested” the breakout point, so it does make quite a bit of sense that we would continue to go higher.
The 6800 level of course is a large, round, psychologically significant figure that a lot of people will pay attention to, so the fact that we recovered is a good sign. If we can break above the top of the candlestick for the trading session on Monday, then it opens up the possibility of a move towards the 7000 handle, which has been a target that I have been paying close attention to. That being the case, the market is likely to continue to find buyers on these dips, and even if we broke down below the bottom of the 6800 level, then I think there is plenty of support underneath all the way down to the 50 day EMA which is climbing up the uptrend line from the triangle itself.
All things been equal, I think that this market will continue to go looking towards that 7000 handle, and if we can clear above the 7000 level it is likely that we would go towards the 7250 handle. When you look at this chart, you can see clearly that the 50 day EMA is spreading wide from the 200 day EMA, which shows a nice uptrend forming and therefore it is likely that we will continue to go higher.
It is also worth noting that the market has pulled back from the previous high, so we have not necessarily broken out completely, but it looks as if we are trying to pick up enough momentum to continue to go higher. I have no interest in shorting this market, as I believe that the FTSE 100 as well as many other indices around the world will continue to get a bit of a boost due to the idea of the reopening trade, so at this point in time it is likely a lot of cheap money will go flowing into the markets going forward.