A rally to new highs

The FTSE 100 is pushing to the 5380 level, will it break higher? take a look at the chart.

The FTSE rallied in five waves [i,ii,iii,iv,v] from the low on 20 November. A five-wave rally means the trend is up, the trend is a continuation of the rally from the November lows therefore last week's decline was a correction [(a),(b),(c)].

A possible scenario would allow for a continuation of the bull market until December. Wave i (circle) is over, wave ii (circle) was last week correction and wave iii (circle) up is now underway.

Because the timing indicators, 13-day BTI and Top 20 Differential, are near overbought, we expect wave iii (circle) to be shorter than wave i (circle). This pattern, where the third wave is shorter, would be an ending diagonal. It's too early to confirm the pattern but there are not many alternatives, in the short term prices should rally to 5430.

To learn more go to www.eyield.co.uk