The FTSE 100 gapped higher to kick off the trading session only to turn around and fill that gap before taking off to the upside and filling the gap from the Monday open. The Monday open was rather brutal, and stock markets around the world fell rather hard. That being said, the market now has filled that gap and there is going to be a whole litany of questions ahead as to what happens with the FTSE 100 next.
The size of the candlestick is somewhat impressive, but at the end of the day we also have to worry about the 50-day EMA above that is sloping lower. We had previously broken below the bottom of the uptrend line that formed the ascending triangle, which has failed. I think there will probably be a little bit of resistance above, so I think at the first signs of exhaustion there will probably be sellers coming back into the market to push lower. Ultimately, I think that the market will try to find a reason to go lower, but it is worth noting that we bounced from the 200-day EMA. After all, the 200-day EMA is a significant technical indicator that a lot of people will pay close attention to. If we had broken down below there, it would have kicked off a rather negative move.
There are a lot of concerns about the United Kingdom and the Delta variant coronavirus picking up, as well as a lot of questions about how the reopening is actually going to play out. After all, the British are still going round and round about having “vaccine passports” for various parts of the country, even though there are plenty of Britons who are not vaccinated. Beyond that, there are also concerns about the overall global economy and whether or not things will continue to pick up. After all, we have had a lot of easy gains over the last several months, but now people have to start to factor in the reality of how the economy may or may not move going forward. We are starting to get beyond the “reflation trade” and starting to think longer-term about where we are going to be from a post-pandemic perspective. There are still a lot of questions out there, so equities have been all over the place.
