The FTSE 100 has pulled back significantly during the course of the trading session on Tuesday to reach down towards the 6900 level. This is an area that has been important more than once, as we have seen buyers and sellers here. The size of the candlestick is of course very negative, and therefore I think it is going to be a potential negative sign for the short term.
That being said, the 6800 level is likely to be supportive based upon the fact that it is the top of the previous ascending triangle, and now looks as if it is where the 50 day EMA is coming into the picture to lift the markets further. Ultimately, this is a market that will probably go looking towards the highs given enough time and fulfill the target of 7200. The biggest problem of course is that the British pound continues to rally against the US dollar, so stocks in the UK will continue to have that headwind to deal with.
All things been equal, this is a market that continues to see the 50 day EMA as an important technical indicator to follow, and therefore I think it is only a matter of time before we would have value hunters coming back into this market, right along with other stock markets around the world. It is very likely that we would see people looking to take advantage of the massive liquidity situation will have around the world. After all, that has been the case for quite some time, but of course it is not quite as out-of-control as the US stock markets can be, but the FTSE 100 continues to look bullish longer term despite the fact that we have seen such a significant selloff. I think we may have a little bit of stabilization ahead of us, and if we get that then I think it is only a matter of time before we would see a lot of money flowing right back into the stock markets as traders still focus on the reopening trade more than anything else. That being said, if we were to break down below the 6800 level, we probably go down towards the 200 day EMA which is currently at the 6550 region.
