The FTSE 100 Index fluctuated during the trading session on Friday as we saw a lot of choppy behavior in general. Ultimately, the 7100 level above continues to be an area of interest, as it was the top of the recent ascending triangle, which was also part of the construction of the ascending channel. The ascending channel is being tested from underneath, so there is a little bit of a crossing of a couple of lines that technical traders will be paying close attention to.
It does look like the FTSE 100 is running out of momentum, so it would not be surprising at all to see a little bit of a pullback. If we drop from here, it is likely that the market will go looking towards the 50-day EMA, which sits just below the 7000 handle. The 7000 handle is a large, round, psychologically significant figure, and a lot of noise could be expected in that area. If we were to break down below the 50-day EMA, then it is likely that the market could go looking towards the 6900 level, possibly even the 200-day EMA underneath. The 200-day EMA currently sits at the 6760 level and is rapidly approaching the 6800 level.
On the other hand, if we were able to get above the 7100 level, the market is likely to go looking towards the 7200 level, where we had previously made a massive high in the market. If we break above there, then the market is likely to continue to go much higher. On the other hand, if we do break down below the 50-day EMA, we could be threatening a serious breakdown in this index and a retest of that 200-day EMA. Longer-term traders will look at any move below the 200-day EMA as a trend change, so that certainly has to be paid close attention to as well. Risk appetite comes into play as well, but at this point I think this is more or less a situation where we are running out of momentum. Markets cannot go straight up in the air forever, and the FTSE 100 will not be any different.
