The media have done a great job of spooking people in Europe and around the world. Could Brexit -- just as Y2K did -- end up being much ado about nothing?
Conditions in London seem to indicate a sense of bullishness in England and, perhaps, the rest of the world's stock markets. Below looks at the pattern of the FTSE in London.
The FTSE 100 has been weaker than the S&P 500 for the past year.
But during the last few months, the FTSE appears to have been forming a bullish reversal, inverse head-and-shoulders pattern, just above its 6-year rising channel support line (A).
If that pattern read is correct and the FTSE happens to breakout above the neckline at (1), the price action would suggest “Risk On” in London and maybe other key European markets. For the pattern to be bullish for London, resistance has to be taken out.
Does Brexit and Y2K have something in common, too much fear? If an upside breakout takes place at (1), a ton of fear could be unwound.
Europe should be concerned not about Brexit, but instead about whether that rising support line (A) get taken out. If that happens, it would indicate that the current 6-year trend of higher lows and higher highs will be broken.