The FTSE 100 initially rallied on Tuesday but gave back gains almost immediately to fall towards the 7460 level. The 7460 level only matters because it was roughly where the top of the previous channel was, so a certain amount of “market memory” comes into play as previous resistance should offer current support. So far, that does seem to be the case, as we have bounced back above the 7500 level from that test.
The FTSE 100 has been bullish for some time, and it does look like we are trying to get towards the 7600 level. This is a market that I think will eventually find plenty of buyers on dips, as long as we can stay above the 7400 level. The 7400 level is an area where we would see a lot of interest due to the fact that it was a previous high, and we have the 50 day EMA reaching towards that particular area. In general, this is a market that I think given enough time will go higher, but we also have a lot of noisy behavior that we will almost certainly have to chew through in the short term.
The FTSE 100 is reflecting the idea of the British economy being in better shape than a lot of other ones, as it looks like they are going to break out of the coronavirus situation quicker than a lot of the other G10 economies. Whether or not this is true is a completely different question, but it seems to be what the market is seeing. Either way, this is a market that I have no interest in shorting, and I look at pullbacks as a potential buying opportunity at this point.
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