The FTSE 100 is continuing to find it difficult to break above the resistance created for it at the 5770 level area. Despite a good performance on Friday it is still stuck in the doldrums underneath the 5770 level. For six consecutive weeks now this resistance has prevented the FTSE from moving further upwards.
In turn this can create a situation where the index can become exhausted by the effort involved in the many weeks of trying to breakout above the resistance and this can be the cause for it to give up and to fall quickly backwards instead. We have seen this sort of situation before where the expenditure of energy required in continually hitting its head on the resistance is such that the resulting exhaustion kills off any remaining buyer support and causes the index to fall away quickly.
However, there is one important factor present in the current situation which should not only prevent this happening but which should also provide the impetus for a coming breakout. And that is that all of the other major indices either have already broken out above their resistance levels or, as is the case with the FTSE 250 and Smallcap indices, are in process of successful breakouts. The important S&P 500, as well as the DJIA and the Nasdaq 100 have all moved impressively above their recent resistance levels.
So, whilst it is possible that the FTSE 100 is going to show the World markets the way for them to follow (downwards) it is highly improbable and it is much more likely that the FTSE 100 will, this week or next, be pulled up by dint of arbitrage and be able to put the 5770 level behind it and to commence its move up towards the next level at 6160.
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