As long as the British pound continues to be very cheap, that helps the idea of stocks going higher in that country, so this is yet another tailwind for this market.
The FTSE 100 fell after initially gapping higher on Wednesday but then fell almost immediately. At this point, the market found plenty of buyers, right in the middle of the consolidation of the most recent noise that made up the uptrend for the FTSE. The 50-day EMA is currently sitting right around the 7200 level, so I think it will make sense that there should be plenty of value hunters in this general vicinity. Because of this, I think the recovery makes sense and, as we have seen stock markets recover quite nicely in Europe during the session, I think this all comes in quite nicely as far as a package is concerned.
If we were to break down below the 50-day EMA, then it is possible we could see a little bit more of a pullback, but right now I do not think that will happen any time soon. That being said, even if we did, I suspect that the 7000 level will be the “floor in the market”, as the 200-day EMA is approaching that level, and we have a lot of structural noise in that general vicinity that could come into the picture as well. This is a market that will look at that as a nice buying opportunity, assuming that we can even get down there. If we break above the top of the candlestick for the trading session, then it is likely that we could go looking towards the 7400 level. I like the idea of buying short-term pullbacks, and it certainly looks as if the Wednesday session has done quite a bit to bring upon the idea of plenty of “buy on the dips” attitudes.
As long as the British pound continues to be very cheap, that helps the idea of stocks going higher in that country, so this is yet another tailwind for this market. At the end of the day, we are in an uptrend anyway, so there is no point in trying to fight that. The market will continue to be a situation that is more of a grind than an explosive move to the upside, but this little pullback could even be thought of as a potential bullish flag.