The FTSE 100 pulled back significantly on Wednesday as we continue to chop around without any type of direction. The 50-day EMA has offered a little bit of support, but like most other markets, the FTSE 100 has no idea where it wants to be. We are in an uptrend, which is something that you have to pay attention to. But at the end of the day, I would not get overly aggressive about anything at this point. Central banks around the world have no idea what they are doing, and it is reflected in stock markets everywhere.
When I look at this chart, it is obvious that the 7190 level is the major barrier that has to be overcome in order for traders to get excited about owning this market, at which point it is likely that we would go looking towards the 7300 level. After that, the 7400 level would be targeted, which is yet again another large, round, psychologically significant figure. The market is going to continue to see noisy behavior, so I think you have to be very cautious. If we were to break down below the 7000 level, that could bring more selling into the picture.
On a breakdown, you have to pay close attention to that previous uptrend line, because I assume that it would be important. We had been in a channel for a long time, so keep in mind that we could see a significant move in that type of scenario. After that, then we have the 200-day EMA. Regardless, I think at this point the stock markets are still trying to prepare themselves that the world economy is moving forward, and eventually somebody in the central bank will say something to make the markets go higher. Markets have been highly manipulated for the last 13 years, even though the FTSE 100 is probably more peripherally so, due to the Federal Reserve and what goes on in the United States. Either way, it is obvious that we are in an uptrend, so you do not short the market, unless we break big figures such as the 7000 handle. I think we will probably stay in the short-term sideways mass for a while.
