The FTSE 100 has broken out during the trading session on Monday, to clear the 7180 handle. We just barely got above the most recent high, but at the end of the day it matters, and now it looks as if the market is going to go looking towards the 7200 level next, and then of course 7300. Breaking above the 7200 level should not take much effort, because quite frankly we finished 16 points below that level at the end of the session, meaning that you are not asking too much to make that happen.
The FTSE 100 has been very choppy as of late, but you can notice that the 50 day EMA has offered significant support, so it certainly looks as if the overall trend is very much intact. We had a rather significant pullback a while ago to reach towards the 200 day EMA, but since then every time the market has pulled back, the FTSE 100 has shown a certain amount of resilience that has to be noticed. By going to the upside, you are going with the overall momentum, and therefore I do not have a scenario in mind that I would be a seller. I think that when it comes to trading the FTSE 100, it is all about having enough patients the way for pullbacks that offer value.
At the first signs of a bounce, I would be all over this market, as I do believe that ultimately will go looking towards the 7500 level, but that obviously something that will take some time to get to. That is probably going to be seen sometime during Q4, and assuming that we continue to have more of a “risk on” attitude around the world. If we do in fact continue with that attitude, then I think the FTSE 100 will rally right along with several other indices globally. Furthermore, you have to pay close attention to whether or not the British pound starts to strengthen too much, because it does hurt exports when it gets to be “expensive.” That being said, it does not look like a market that can be sold anytime soon, and as long as we stay above the 50 day EMA, I think that continues to be the case going forward. The most recent action has played out quite nicely as a bit of a “bullish flag.”
