The FTSE 100 initially rallied during the trading session on Tuesday but gave back the gains in order to show signs of confusion. The 7000 level is an area where a lot of traders will be interested in the market, as it is a large, round, psychologically significant figure. We have seen the area offer both support and resistance, but we have sliced through it so many times that it is starting to lose its significance.
Because of this, I think it now is going to be more or less a bit of a magnet for price as it offers both support and resistance and therefore it becomes an area of extreme interest. The FTSE 100 continues to see a lot of inflow over the longer term though, as we have seen the United Kingdom start to show signs of strength. After all, the market is likely to see a lot of inflows when the UK opens up, but in the short term it looks like we are continuing the overall noisy behavior.
To the downside I believe that the 50-day EMA offer support and most certainly the 6800 level should be as well. That was the top of the previous ascending triangle, so it should very well offer plenty of support as there was a lot of inflow going in at that point. Beyond that, we are in an uptrend regardless, and you could also make an argument of the market forming a bit of a bullish channel.
To the upside, if we can break above the top of the candlestick for the session on Tuesday then it is likely that we go looking towards the 7200 level. I do believe that given enough time we are more than likely going to see a lot of bullish pressure and, because of this, I think we are going to see plenty of buyers. What we are seeing here is a “long only” type of index, but that should not be a huge surprise considering that the stock indices around the world continue to show signs of strength due to the massive liquidity measures and the “reopening trade” that we see around the world as the economies are starting to open up at the same time.
