By FXEmpire.com

The FTSE 100 had a quiet session on Monday as the markets had very little information to digest for the day. The markets have a day-to-day mentality now, and as such will find the next several sessions difficult to deal with as there is no sudden news to react to on a minute by minute basis. In truth, this is the epitome of an unhealthy marketplace, as these knee-jerk reactions to every little headline certainly aren’t going well for the retail trader.

This is the same in both London and New York, where we had simply entered a high-frequency trading type of environment. Until the Germans have their decision in the courts on the 12th day of September, it’s likely that we will move on one minor headline after another, if at all. Compounding the problem with movement in the markets is simply that we are smack dab in the middle of vacation season for most Europeans. This of course drastically affects the amount of liquidity in the marketplace, and the amount of risk that people were willing to take.

As September rolls around, after the announcement out of Germany we should see real movement in the markets. It’s very likely that the next three weeks or so are going to be very quiet. As a side note, on the same day we also have parliamentary elections out of the Netherlands which could of course move the markets as well. Remember, there are plenty of anti-bailout candidates out there that could be elected.

Looking at the technicals, we see that the 5900 level is still fairly resistive, and probably extends all the way to the 6000 level. With this in mind, we think that although the last couple of days have produced hammers, the next move will be very difficult if it is to the upside. In fact although the charts do look relatively bullish, and that perhaps there is pressure building to the upside underneath them, the reality is that in this environment it can be very difficult to break out of this area.

Obviously, if we can close above the 6000 mark, this would be extremely bullish for London stocks. This chart reminds us a lot of the GBP/USD Forex pair, so perhaps watching both of them simultaneously could give you a heads up on it and impending move. On the other side of the trade, we think that a breaking below of the 5800 level does move is down the 5700, and would have us ready to start shorting the market on a short-term basis.

Click here a current FTSE 100 Chart.

Originally posted here