The FTSE 100 pulled back a bit on Monday but has also shown a bit of support underneath to turn things around. If we can break above the top of the candlestick for the trading session on Monday, then it is likely that we could continue to go higher. Breaking out to a fresh, new high opens up the possibility of a much bigger move. After all, we have been consolidating between 6800 and 7200, so a breakout would be a big deal. In fact, it extrapolates for a move to the 7600 level.
The FTSE 100 also has to deal with the idea of inflation, but the Bank of England is cued to raise interest rates, so it is likely that we will continue to see a lot of potential help for the stock markets. The FTSE 100 is trying to price in the idea of some growth, and that would open up the possibility of this market going much higher. At this point, I do think that a breakout is likely to happen rather soon, and I would jump all over that if I got the opportunity. Pullbacks at this point in time would more than likely find plenty of support underneath at the 50-day EMA, which is reaching towards the 7100 level.
The market being sold at this point is all but impossible, at least not until we see some type of significant move to the downside. The FTSE 100 will be very likely to continue higher right along with the other indices around the world, so at this point I think we will simply see more of a “buy on the dips” type of mentality. The market has recently made a “higher high”, but still has not quite made something that most people would look at as a massive breakout, so I think we need to see some type of impulsivity to get involved in this market, hopefully based upon a close towards the top of the overall range for the session. Ultimately, this is a market that I think continues to see value hunters coming back into the marketplace, picking up any type of dip that traders are looking to take advantage of. I have no interest in shorting anytime soon.
