The FTSE 100 has gone back and forth during the course of the trading session on Monday to show indecision right around the 50 day EMA yet again. That being the case, the market is likely to see a lot of confusion and hesitation in this area, but the market forming a neutral candlestick means that we are on the precipice of a bigger move.
It is worth noting that there was a lot of upward momentum heading into this last couple of sessions, and of course the 50 day EMA. The explosive move that we had to the upside does suggest that perhaps we are likely to see buyers come back in on short-term dips. The market breaking above the 7100 level would cement a bigger move to the upside, opening up a move towards the 7200 level above. That is an area that has been the top of the overall consolidation for a while, and it is worth noting that is where we had sold off from previously. Breaking above that would obviously be a very bullish sign.
If we do break down below the bottom of the candlesticks of the last couple of days, it is very likely that the market will find a certain amount of support at 7000, which is just underneath there, but even breaking that does not necessarily kill the overall trend. After all, the 200 day EMA sits just above the 6800 level, so all of that combined should offer a nice “floor for the market.” As long as we can stay above that area, it is very likely that we continue to see value hunters picking the market.
Keep in mind that the FTSE 100 is of course highly sensitive to the risk appetite of traders around the world, and that of course is something worth paying close attention to. You can get little bits and pieces of information based upon whether bonds are rising or falling, right along with commodities and other indices. The FTSE 100 is dealing with a lot of concern when it comes to the UK economy, as we are starting to see petrol shortages. This of course is not good for the outlook, so I do think that we continue to see a lot of volatility if nothing else.
