The FTSE 100 initially tried to rally during the trading session on Monday but then fell enough to show signs of weakness. That being said, the 7000 level underneath should continue to offer an area of interest, as it was previous resistance. We had previously broken above the top of an ascending triangle, so it does make sense that we would continue to see a certain amount of buying pressure, as we had been in a strong uptrend for quite some time.
Underneath, I believe that the 6800 level should be very massive as far as support is concerned, and that will have the 50-day EMA which is crossing that level as well. At this point, the market has been paying close attention to the previous uptrend line that the 50-day EMA is hanging onto. This is a market that certainly looks as if it is a “buy on the dips” type of scenario, so I am simply looking for signs of support that I can take advantage of. After all, the Bank of England will be tapering in the bond market, so that may have a little bit of a short-term pullback, but at the end of the day traders are still looking to put a lot of money to work.
One of the biggest headwinds to the market during the day on Monday was the fact that the British pound took off straight up in the air, but that is a short-term issue more than anything else. The 7200 level would be a psychologically important figure and is something that people will be paying attention to as the FTSE 100 tends to respect every 200 points as well. In that sense, I think that will continue to go even higher, but the 7200 level might offer a short-term resistance barrier. Ultimately, I have no interest in shorting this market until we break down below the 200-day EMA, which is closer to the 6600 level. If we were to break down below there, then I think the trend would probably be very negative, so what we are looking at is a nice opportunity every time it drops and breaks out. Along with other stock markets, this market should continue to go higher.
