I believe it is probably only a matter of time before the market start to price in the fact that the virus itself does not seem to be as dangerous as once thought.
The FTSE 100 went back and forth as we slammed into the 7200 level. This is an area that has been important more than once, so it should not be a huge surprise to see a little bit of hesitation in this area. With that being the case, I think the market is more likely than not to go looking towards the 50-day EMA again, because we have been building up a little bit of pressure between the 50-day EMA and the 200-day EMA. With that being the case, I like the idea of picking up little bits and pieces of value as we move along.
The 200-day EMA underneath sits at the 6984 handle and is approaching the 7000 level. The 7000 level is a large, round, psychologically significant figure that will attract a certain amount of attention, and I think it does make sense that we would see it act as support. I do not think that we break down below there, especially considering that we have seen such a fight over the last couple of days. However, this does not necessarily mean that it is going to be easy to break out to the upside either. This is a market that continues to see a lot of noisy behavior, especially with concerns about the UK coronavirus statistics. While we are starting to see omicron show up in various places, the idea is that the British have been much more stringent in their fight when it comes to the coronavirus, so it should not be a huge surprise to see the market freak out. At this point in time, I believe it is probably only a matter of time before the market start to price in the fact that the virus itself does not seem to be as dangerous as once thought. If that is going to be the case, then I think the FTSE will recover.
It remains a “buy on the dips” market, but if we can break above the 7200 level, then I think we can really start to build pressure to the upside. This could open up a move towards the recent highs near 7400, which is my longer-term target.