I am still a little leery about this market as we have seen a lot of negativity involving the British pound and risk appetite in general, and I think we will eventually see this market try to roll over.
The FTSE 100 rallied significantly during the trading session on Monday, only to give up about half of the gains. By doing so, the FTSE 100 looks as if it is threatened still, but it should also be noted that there was a hammer during the previous candlestick, so that could be a little bit of noisy trading ahead. I think that makes sense, because we are on the precipice of trying to figure out where the world’s economy is going. The FTSE 100 will not be insulated from potential problems, so it will move right along with risk appetite like any other index.
The shape of the candlestick is a bit of a shooting star, but again, we have a couple of hammers within the tent candlesticks before, so I think this is probably going to end up being more or less a choppy and noisy environment as we try to figure out where to go next. If we can break above the top of the candlestick for the trading session on Monday, then it is likely that the market could go looking towards the 7100 level, which is where we had seen a lot of selling pressure previously. It was the top of what looks like an ascending triangle, and the fact that we could not break above there is a negative sign. Because of this, I am still a little leery about this market as we have seen a lot of negativity involving the British pound and risk appetite in general, and I think we will eventually see this market try to roll over. However, you need to keep that bullish attitude and possibility in the back of your mind if we can clear the top of the candlestick.
Underneath, we have the 200-day EMA sitting at the 6750 level, which is an area that I think a lot of people would pay close attention to. Breaking down below that level would absolutely destroy any semblance of an uptrend and could send this market much lower. I think that would probably coincide with a lot of other indices also falling, so this would be more or less a global phenomenon, not just a British one. That being said, keep a close eye on this one.