The FTSE 100 fell a bit during the trading session on Wednesday to pierce the 50-day EMA and the uptrend line which is part of the ascending channel that we have been in for some time. It is interesting that we find ourselves near the 7000 level, which is a large, round, psychologically significant figure that a lot of people will be paying close attention to. Because of this, and the fact that we bounced a bit, I think that the buyers are at least trying to stay in the FTSE 100, but there are a lot of questions out there when it comes to the UK economy going forward.
One of the biggest issues will be the fact that some banks are starting to move to places like Paris and Frankfurt, and that seems to be causing some issues. Furthermore, there are a lot of questions as to whether or not the United Kingdom is going to open up completely due to the Delta variant of the coronavirus pandemic, which seems to be something that officials are very concerned about.
That being said, we are still very much in an uptrend, and if we can break above the top of the candle for the trading session on Wednesday, it does suggest that we are going to continue going higher, as it would continue to form a little bit of an ascending triangle inside the ascending channel based upon the last couple of weeks. That would be a very bullish sign, and I think at that juncture we probably would be heading towards the 7200 level above which was the most recent high.
On the other hand, if we break down below the bottom of the candlestick from not only Wednesday, but from the lows of the previous week, that could send the FTSE 100 looking towards the 200-day EMA, which is currently sitting at the 6689 level. That would obviously be a very bearish move, and at that point I would anticipate that most European indices would all move in the same direction, which would be lower. While there are some United Kingdom-specific issues out there, the reality is that all of the stock markets in this part of the world tend to move in the same direction.
