FTSE 100 Forecast: Showing Resiliency After Major Selloff

The FTSE 100 is an index that has been in a nice ascending channel since the beginning of the year.

The FTSE 100 gapped lower to kick off the trading session on Wednesday, and then shot lower to see whether or not there was going to be even more pressure to the downside. That being said, the 50-day EMA has shown itself to be supportive, and it should also be noted that the 50-day EMA is walking right along the uptrend line, so there is yet another reason why traders could be paying attention to it. Furthermore, we ended up forming a bit of a hammer, so that in and of itself is a very bullish sign in what has been a strong uptrend.

If we break down below the bottom of the hammer, then we still have to look at the 50-day EMA and the 6800 level as support, as the 6800 level was an area we broke out from. The ascending triangle that had been formed before that is a sign that we are ready to go higher. Based upon the measured move, the market is likely to go looking towards the 7200 level, an area that we tried to get to previously. I do think that we will not only get there, but we will eventually break out. After all, stock markets around the world continue to be boosted by the “reopening play”, and all of the liquidity measures that are being thrown around.

If we were to break down below the 6800 level, then we could go looking towards the 200-day EMA, but at the 200-day EMA it would be a trend-defining type of situation. The FTSE 100 is an index that has been in a nice ascending channel since the beginning of the year, and the reaction that we have seen over the last several days has not changed that. Ultimately, this is a market that I think is going to follow that trajectory. In general, I do not have any interest in shorting this market more any other stock market, as most traders are still trying to find ways to beat inflation and take advantage of the businesses that will find much more demand for their products as lockdowns end globally. The United Kingdom is starting to see strong economic numbers as well, so that is another reason to get long of this market. That does not mean that it is going to be easy, but clearly that is the overall direction.

FTSE 100 Index

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.