FTSE 100 Forecast: Fall to Continue Sideways Attitude

This is a market that will continue to be very noisy and choppy, but at the end of the day I think this comes down to risk appetite in general.

The FTSE 100 fell again on Tuesday to show weakness yet again, as the 7100 level continues to offer resistance. Having said that, the 7000 level continues to be supportive, so I think at this point it is very likely that we will continue to see a lot of choppy behavior in this general vicinity, and the market also is paying close attention to the 50-day EMA.

If we were to break down below the 7000 level, then it is very likely that we will continue to go much lower, perhaps reaching towards the 6900 level which is an area that has the possibility of buyers coming in based upon the trendline. After all, we had been in a nice channel for quite some time, and the market probably will have remembered that. The market has been paying close attention to the 50-day EMA as well, so I think of that more or less acts a bit of an anchor to price.

I think it comes down to risk appetite due to the fact that stock indices in general behave like that. After all, if the market were to sell off due to a “risk off” type of move, then it is likely that we could go looking towards the 200-day EMA eventually. Breaking down below that could signify that we are going much lower. Alternatively, if we were to turn around and break above the 7100 level, then it is likely we go looking towards the 7190 level. The 7190 level is an area where we had seen a bit of a “double top”, and if we can get above there then it is likely that we could go much higher, reaching towards the 7300 level. This is a market that will continue to be very noisy and choppy, but at the end of the day I think this comes down to risk appetite in general. In other words, as we continue to look at the indices around the world through a prism of similarity, meaning that if we see other indices in this part of the world fall, that will probably drag the FTSE 100 lower. On the other hand, if indices such as the DAX and the CAC rally, that might be reason enough to send this market higher.

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.