The FTSE 100 has had a strong run over the last couple of days, as we are now threatening the 7200 level. The 7200 level is worth paying attention to because it was the most recent high before we pull back quite significantly. That being said, the market has also broken above a significant resistance barrier in the form of 7100, which also has been important multiple times. The fact that we did that and then breaking above the bottom of the channel that we previously had been in, which of course was a very bullish sign. Remember couple of days ago I mentioned that this intersection of resistance that we just broke above was going to be important. I thought we could pull back, but ultimately the market smash through that area and it does suggest that we are more likely than not going to continue to go higher.
If we do break above the 7200 level, it is likely that the market could go looking towards much higher levels, I believe that the market will eventually go looking towards the 7500 level, with a little bit of hesitation every 100 points. If we pull back, the 7100 level should offer a significant amount of support and therefore I do think that it is only a matter of time before buyers get involved. Keep in mind that the British pound also has lost a little bit of steam, which makes the idea of exports cheaper, so that of course helps the idea of the FTSE rallying as well.
At this point, I think we continue to buy dips going forward but breaking down below the 7100 level opens up the possibility of a move down to the 50 day EMA. The 50 day EMA is sitting right at the 7000 handle, which of course is a large, round, psychologically significant figure and as a result that should offer a little bit of a “floor the market.” Breaking down below that could open up significant selling pressure but right now as things stand it does not look very likely to happen. With that being the case, I think it is only a matter of time before we see continued upward pressure. The shape of the candlestick for the session on Thursday also lead credence to the idea of the buyers are stepping in.
