Week Beginning 03/01/2012.

Value 12217.56

The market looks set to start the new year in a much more positive light than it ended 2011. The double top that had been threatening to form throughout much of the end of last year is now but a distant memory and instead there is the very real possibility of the market testing recent highs.

Figure 1 shows how the markets price is attempting to regain the previous channel that it has been in since the beginning of 2009, although there is cause for concern that the resistance level at 12450 could precipitate a rapid reversal of the markets direction should exogenous events dictate.

Figure 1

It should also be noted that there is a Fibonacci resistance level at approximately 12367 (Figure 2) which although breached earlier last year failed to provide any support to the market once the breakout occurred. Therefore although a short term increase back towards the recent highs is highly probable, the likelihood of this bullish spell being prolonged is still in doubt. Much will be decided by the significance of the support levels above the psychologically important 12000 mark.

Figure 2