At the close, the FTSE 100 futures market was down 1.68%, and what would have been a very negative reaction to the “risk off” attitude that we had seen around the world. Furthermore, when you look at the overall uptrend, you can see that there is a channel that we have been trading in. We are testing the bottom of that channel, and that of course is a very significant event.
While we are still in an uptrend, it is worth paying close attention to the hammer from a couple of weeks ago that reaches down towards the 6850 level. If we break down below that level, then the market is likely to go looking towards the 6800 level and the 200 day EMA. It is somewhat likely that we do see this happen, especially if the clothes being so close to the bottom is a sign of momentum. We have broken down below the previous support level, which had made up a bit of an ascending triangle that now looks to be killed.
To the upside, if we were to break above the top of this very significant candlestick during the trading session on Thursday, then it is likely that we could go higher, clearing the 7000 level and then perhaps going to go looking towards the 7200 level. After that, then it is very likely that we could go to the top of the ascending channel, in a continuation of what we had seen previously. While I am not necessarily looking to pile into a position to the downside, I do think that there is a real chance that something big could be brewing. This is not only in the FTSE 100, but it is also another indices around the world so it makes quite a bit of sense that the sellers could be stepping into this market and making their thoughts known. I believe the next couple of days should be rather crucial, and therefore I think it is worth paying close attention to the next candlestick, especially if it is an impulsive one and closes towards the top or bottom of the range for the day depending on the color.
