The FTSE 100 has pulled back a bit during the course of the trading session on Thursday, as we had reached towards the gap that had previously been a major factor in the market. Furthermore, we also have the 50 day EMA which is an area that a lot of people will be paying attention to as well. It is starting to tilt lower, breaking through the uptrend line of the ascending triangle that we have broken down below, so I think there is a technical argument to be made for resistance just above.
Looking at this chart, we have progressively made uglier moves, and at this point it is a debate as to whether or not the stock markets around the world are going to stabilize, especially here as we have seen the 200 day EMA offer support for the time being. Nonetheless, we are squeezing between the 50 and the 200 day EMA, which is something that is common for a market that is going to grind sideways. After all, both short-term and long-term traders are starting to look at it from both the psychology and the structure of the market in the same light.
If we were to turn around a break down below the 200 day EMA, then it is likely that the market is going to drop quite drastically, perhaps reaching towards the 6500 level, possibly even lower than that towards the 6250 level. I do not necessarily think that we are going to see a massive breakdown, but I think we are going to see difficult days ahead, as we will continue to chop back and forth. If we were to break above the 50 day EMA instead, the next resistance barrier would be the top of the previous triangle, opening up the possibility of a move higher, perhaps trying to take out the most recent highs. Nonetheless, it is going to take something rather significant to move this market to that level, so I suspect a lot of range bound chop with a slightly downward tilt could be the way forward over the next several sessions. Keep in mind that the potential issues with the Delta variant will also have a lot to do with what we see going forward and the FTSE as well.
