It certainly looks like we are much more likely to go higher than lower.
The FTSE 100 initially pulled back on Wednesday, only to turn around and show signs of strength. The market is above the 7100 level, which is a very bullish sign, and I do believe that we will eventually continue to go higher. It should be noted that the 7200 level above is an area that a lot of people will be paying close attention to, as it was the top of a major consolidation region. If we can break above there, then the market will continue to go higher based upon a longer-term trade.
Underneath, the 50-day EMA is currently sitting just above the 7000 handle, which is where the a lot of the “fair value” trading has recently happened. The market has been very noisy in this general vicinity, where I have seen a lot of back-and-forth trading. You can see that I have circled that area, and it shows just how noisy this area is and difficult to overcome. At this point, we need to see this market break down below the 6900 level to clear that level, and then perhaps go looking towards the 200-day EMA and the 6800 level. The 6800 level is crucial, because it was a major support level previously, and is the bottom of the overall consolidation that we had been in for a while.
It is worth noting that the 50-day EMA is relatively flat, but it is at least trying to curl to the upside. That shows that we are trying to get to the upside and, if we can in fact do so, then we could go looking towards the much higher levels closer to the 7500 level based upon the measured move of the breakout. This is a market that has shown signs of life more than once but has not been able to break that massive 7200 level. When it does happen, that will send a lot of momentum into this market and a lot of people looking to pick up bits and pieces of value on short-term dips. That being said, if we were to break down below the 6800 level, then I might consider shorting; but between now and then, it certainly looks like we are much more likely to go higher than lower.