FTSE 100 Forecast: Index Forms Piercing Pattern

Christopher Lewis

The market should continue to reward those who are patient enough to look for value, and that is exactly how I plan on trading this market, simply waiting for pullbacks to present themselves in order to pick up value.

The FTSE 100 initially gapped higher to kick off the trading session on Friday, but then turned around immediately to crash into the lower part of the previous candlestick, forming what is known as a “piercing pattern.” This is technically a negative sign, but I do not think this means anything other than a short-term pullback on the horizon. The GDP numbers in the United Kingdom were much lower than anticipated, so that does no favors for the market other than the fact that some people have bought stocks due to the idea of the Bank of England continuing to be extraordinarily loose with monetary policy.

However, perhaps during the trading session on Friday traders either were taking profits, or they were starting to think along the lines of what the actual economy in the United Kingdom is doing. Nonetheless, it is very likely that the overall uptrend will continue, so I look at this as a potential value play. I do think that we will probably pull back a little further, because we are closing at the very bottom of the range for the session on Friday, meaning that people will probably want to stay short of this market momentarily. The 7200 level underneath should be supportive, especially as the 50-day EMA is starting to approach it and is curling higher.

Looking at this chart, it does make a certain amount of sense that we would see gravity come back into the picture as the previous candlesticks for the week were a little bit impulsive, but at this point it is difficult to bet against the stock market in any country, due to the fact that the central banks around the world continue to be very loose. In fact, the Bank of England is probably going to be one of the loosest when it comes to the G10, so pay close attention to the liquidity measures supporting the London Stock exchange in general. The market should continue to reward those who are patient enough to look for value, and that is exactly how I plan on trading this market, simply waiting for pullbacks to present themselves in order to pick up value. The FTSE 100 will continue to be one of the better performers, and currently it is set up to make a run towards 7600 based upon the previous consolidation, and its “measured move.”

FTSE 100 Index

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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