It has been very choppy to say the least, and it looks to me like we are just going to grind higher.
The FTSE 100 rallied a bit during the trading session on Tuesday as we continue to reach towards higher levels. The 7000 level has been supportive over the last couple of weeks, just as it had been resistance previously. The market has been in an uptrend for quite some time, and I think that should continue to be the case going forward. The market is essentially forming a bit of an uptrending channel as well, so at this point I do think that we are trying to reach towards the 7200 level.
Underneath, the 50-day EMA is reaching upwards and walking along the uptrend line, so I think that also comes into play as well. The market had previously seen a lot of pressure to the upside, so I think as long as we can stay above this uptrend line, then it is very likely that you cannot sell this situation. After all, the FTSE 100 represents an economy that is in the midst of opening up, and it very likely that it will continue to push towards the upside.
If we can break above the 7200 level, then it likely opens up the possibility of a move towards the 7400 level. The FTSE 100 does tend to move in these 200-point increments, but as you can see, it has been very choppy to say the least, and it looks to me like we are just going to grind higher. At this point, we are also heading into the summer trading season, and it is likely that we will see a lot of this “chippy choppy action” like we have over the last couple of weeks.
If we did manage to break down below the uptrend line, then I might consider shorting this market, but at this point I would anticipate that there should be a significant amount of support near the 6800 level, or perhaps even the 200-day EMA. This is a market that you should only be a buyer of and you should look at it as an opportunity to pick up value every time we dip. In a sense, you can see it has no different than any of the other major indices out there, as central banks around the world continue to flood the world with liquidity.