The 4 week correction in the FTSE 100 index from mid Jan to early Feb looked as though it was the big turning point and the end of the recovery rally that started from the 3500 low back in March ‘09. But the index’s 30wk moving average came to the rescue and (as often happens) caused the index to change direction again and to such an effect that, this week, it has made a new high for this remarkable recovery rally.
(Click on chart to enlarge)
There appears little immediate resistance on the short term horizon to suggest anything other than a short and minor correction so there can be little doubt that the FTSE will reach our target of 5770 soon and it looks likely to do so within the next two weeks. The dominant trend reamins the Uptrend and with this continuing it looks likely that the FTSE will in fact overshoot and try for the 6000 level.
However, even the 5900 area would take the index a bit too far ahead of its 30wk moving average for comfort and this is likely to be the point at which it decides that enough (exhuberance) is enough. A correction back to the 5200 level is then likely.
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