The FTSE 100 initially pulled back a bit on Friday but then turned around to show signs of strength. The 7000 level underneath should offer plenty of support, so it’s likely that we would see that as an area where we would see a lot of interest. As long as we can stay above the 7000 level, it means that we could potentially rally a bit. At the very least, the market looks as if it is trying to stabilize and turn around. Ultimately, if we turn around and break above the 7200 level, it’s possible that we could go to the 7300 level. The 7300 level is also an area that has seen action in the past.
The 200-day EMA sits right around the 7300 area, and if we can break above there it’s likely that we could see this market go to the 7200 level. Ultimately, this is a market that I think needs to see a little bit of momentum coming into it in order to break through all of this noise. That being said, the market is likely to continue to be a bit confusing, but if you are a short-term trader you may be able to go back and forth if you have a nice range-bound system.
If we do break above the 7300 level, then the area above has a lot less noise involved in it and it’s likely that we could go to the 7600 level. The 7600 level is even more resistant and has seen a lot of selling pressure. You should pay attention to other indices around the world, as the FTSE 100 is prone to a lot of the same macro headwinds as the others.
In general, stock markets are moving in the same direction at all times, as it’s all “risk on/risk off” in general. Because of this, if you see the Asian indices rising, that could give reason enough for the FTSE 100 to rally once it opens. On the other hand, pay attention to the British pound, because if it starts to lose a little bit of value, there could be a normal reaction of markets. Ultimately, this is a situation that will continue to be volatile, so keep your position size reasonable.
