The FTSE 100 fell rather hard during the trading session on Tuesday to reach down towards the breakout point of the previous ascending triangle. While this is something that you would expect on a pullback, it is a bit unfortunate that it happened during a single session. I much prefer seeing gradual pullbacks that show signs of stability, not some type of panic sell-off. That being said, we are still very much in an uptrend, and it does look like the market is respecting the top of that previous ascending triangle.
Measuring the ascending triangle, it shows an expected move of roughly 500 points, which could open up the possibility of a move all the way to the 7300 level. The 7000 level has offered quite a bit of resistance, which you would expect due to the fact that it is a large, round, psychologically significant figure. That pullback makes sense, but again, I believe that it would have been better off being a bit slower. It is because of this that I would not be surprised to see some type of continuation to the downside, but only temporarily. I think that taking advantage of the potential bounce is the way to go. Eventually, I do think that we will try to retest the 7000 handle again.
Furthermore, I think that the 50-day EMA underneath continues to offer support, right along with the uptrend line that it is mirroring currently. That uptrend line was the bottom of the ascending triangle that was so important, so I think a lot of people will be paying close attention to that. If we were to break down below there, then things get a little dicey at that point, so I might be looking for shorting opportunities. However, I do not think that will happen anytime soon, so I am looking for some type of supportive candle to jump on, perhaps a daily close that looks a lot like a hammer or something like that and then joining the overall uptrend. If we can break above that 7000 level, then I think it opens up that potential move all the way to the 7300 level, as suggested by the ascending triangle. Keep in mind that the FTSE 100 is moving on the same types of things as other stock indices around the world, namely, central bank liquidity.
