- The FTSE 100 initially fell during the trading session on Tuesday, but what I found particularly interesting is that we turned around almost immediately to show signs of life, opening up a significant bounce to form a hammer.
- The hammer sits just above the crucial 50 Day EMA, an indicator that a lot of people will be paying close attention to.
- With this being the case, I think you need to be cautious and understand the fact that the market has been rallying for some time, so even if we were to break down below the 50 Day EMA, it’s very likely that the FTSE 100 will continue to see plenty of traders willing to get in and start buying.
Trend Continues?
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I think the trend continues to be positive, despite the fact that we have been somewhat sideways recently. Ultimately, this is a market that shot straight up in the air, and I think there are a lot of questions asked about whether or not we can truly keep up this type of momentum. I don’t necessarily know that the momentum will continue, but I do think that the overall movement to the upside will. The most obvious level to pay attention to is 8900, as it has offered a bit of a ceiling in this market, but now that we have started to see a bit of stability near the 50 Day EMA, and the 8700 level, it’s possible that we may get an opportunity to buy on the dip. Buying the dip in an uptrend is one of the best way to go, as it gives you an opportunity to take advantage of the overall momentum of longer-term trading.
If we were to break down below the 8650 level, then it’s possible that we could see this market dropping down to the 8500 level, where the 200 Day EMA currently resides. It is rising, so I think that could offer a bit of support as well. I have no interest in shorting the FTSE 100 anytime soon.
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