The FTSE 100 initially gapped higher to show signs of strength right away on Monday, and then essentially filled a gap that formed on Monday. That being said, the market has shown itself to be rather negative, closing roughly where we closed on Friday. In other words, it looks like we were ready to go higher, but gave back all of those gains to show a rather disappointing turnaround. Because of this, it looks as if the market is going to continue to hang about the 7000 handle, which is a large, round, psychologically significant figure that a lot of people will pay attention to.
It is worth noting that the 50-day EMA is hanging about in the same area, so it makes sense that a certain amount of magnetism will be found in this area, as we have seen over the last couple of days. You can see that I have this area circled, and it is worth noting that there has been a significant amount of support underneath at the 6800 level, while there has been a significant amount of resistance at the 7200 level. We are essentially right in the middle of all of that, so I think we will continue to see choppy sideways action.
The closer we get to the 6800 level, the more likely I am to be a buyer of supportive or bullish candlesticks, just as I would be hesitant to be a buyer anywhere near 7200. That being said though, if we were to break above the 7200 level on a daily close, then I might be willing to buy because it should show signs of continuation going higher, as it would open up the possibility of the “buy-and-hold” type of scenario.
The market is certainly one that I do not want to short, at least not until we break down below the hammer near the 6700 level, and on a daily close below that level I would be a seller. Until then, I am looking for an opportunity to get long, but certainly would not mind picking up a little bit of value in the meantime. Whether or not I get it remains to be seen, but I have my areas to pay attention to over the next several days and will be keeping you up to date here at DailyForex.
