A break down below the 6800 level could open up a fresh new wave of selling in the market.
The FTSE 100 has rallied a bit during the course of the trading session on Thursday but gave back gains to reach back towards the 50 day EMA. That being said, the market is firmly ensconced in the range that we have been in for a while, with the 7200 level above offering quite a bit of resistance, while the 6800 level and the 200 day EMA underneath offer quite a bit of support. That being said, the market is likely to continue to see noisy behavior right around the 50 day EMA as it is slicing right through the middle of the overall range that cell.
The market ended up finding enough resistance to turn around and form a bit of a shooting star, which of course is a negative sign in and of itself. That being said, the 7000 level underneath will offer a little bit of support, as we have bounced from there but at the end of the day, I think it is an area that can be sliced through just as it has been multiple times recently. I think that the market is going to continue to be very choppy and noisy, so that being the case it is likely to see erratic behavior over the next couple of sessions.
The FTSE 100 of course will move based upon risk appetite, and therefore you need to pay close attention to how the markets overall are doing. This is especially true when you look at stock markets in the rest of the European region, with an eye on the DAX. If the DAX starts to selloff, it is very unlikely that the FTSE 100 can rally in the face of that type of negative pressure. The DAX is considered to be the “blue-chip index” of the region, and the FTSE 100, although robust, is a little bit more down the risk spectrum than the German index, so that correlation cannot be forgotten. I anticipate that we probably pull back a bit from here, but I do not necessarily think that we are going to meltdown anytime soon. A break down below the 6800 level could open up a fresh new wave of selling in the market. On the other hand, if we can finally break above the 7200 level, then the FTSE 100 can continue the previous uptrend.