At this point, it looks like we could see a little bit of a pullback, but that pullback should be looked at through the prism of offering value in a longer-term uptrend.
The FTSE 100 did rally during the trading session initially on Wednesday to reach above the 7200 level, an area that I talked about over the last couple of days. Now that we reached that level, it appears that there was a certain amount of profit-taking at that big figure, which would not be a huge surprise. The market tends to move in 200-point increments, much like the S&P 500.
At this point, it looks like we could see a little bit of a pullback, but that pullback should be looked at through the prism of offering value in a longer-term uptrend. After all, the market has been rising for months on end, and it may be approaching the top of an overall channel to the upside. Because of this, it is very likely that the pullback could find itself reaching towards the 7000 handle. The 7000 handle is crucial, as it is a large, round, psychologically significant figure and roughly where the 50-day EMA pops up. The 50-day EMA is a significant indicator that a lot of people pay close attention to as it is normally indicative of the medium-term trend, and an area that offers quite a bit of dynamic support and resistance.
If we turn around and break above the highs of the day, then that means that we could clear the 7200 level, which would be a very bullish sign and could open up the possibility of a move towards the 7400 level, and then eventually the 7500 level, which is my longer-term target. Because of this, I think that buying dips should still work, unless we break down below the uptrend line, and by extension the 7000 level, then I see no reason to short this market. I could be convinced of shorting it underneath there, perhaps making an attempt to get down to the 200-day EMA. Between here and there, I think there are plenty of places that people are going to be interested in trying to pick up value, so I still look at this through the prism of a “buy on the dips” type of scenario, just as I have for multiple months. The UK getting ready to open up completely in roughly a month or so helps the situation as well.