The FTSE 100 broke below the bottom of a symmetrical triangle during the trading session on Friday to show further weakness. It is also worth noting that we had initially tried to rally during the session only to show the 50-day EMA offering resistance. This is quite often the case when you start to see weakness, so at this point it is likely that we will break down below the bottom of the candlestick for the trading session on Friday to open up the possibility of even further losses. At that point, we could be looking at the 6800 level underneath, where the 200-day EMA is currently tracing towards.
The FTSE 100 is experiencing quite a bit of pressure due to the fact that a lot of concern abounds when looking at the reopening trade, especially as inflation is now going to be a major concern. At the same time, we have seen banking stocks suffer, and financials are huge part of the FTSE 100. Nonetheless, the technicals are starting to roll over and I do fully anticipate that this bearish pressure will continue. If we were to break down below the 200-day EMA, which at this point we will probably see the market coincide with that 6800, then we should continue to see further selling.
On the other hand, if we do turn around and breakout above the 50-day EMA and, perhaps even more importantly, the top of the triangle from this past few weeks, then we might see the FTSE 100 go looking towards the highs again which is closer to the 7200 level. That being said, the fact that the market broke down significantly below the bottom of the ascending channel and ended up forming a bearish candlestick closing at the bottom of the range suggests we will more than likely still favor the downside, at least for the time being. There seems to be a lot of concern around the world right now, so the FTSE 100 is probably going to suffer as a result. This next week is very likely to be choppy regardless of which direction we go. The markets are also digesting the idea of Bank of England Member Saunders suggesting that perhaps interest rates may need to rise quicker than originally thought.
