Week Beginning 30/01/2012.

Value 12660.46

As anticipated at the beginning of the year, the market finally reached and then surpassed its recent high on 3^rd Mat 2011 of 12840. However the market failed to hold above this level at the close of the day and by the end of the week has slipped back nearly 200 points.

This apparent weakness and failure to hold above the Fibonacci 78.6% level of approximately 12743 suggests that market momentum is weakening and that further gains are likely to be limited.

Figure 1

In the medium to long term it is therefore expected that the market could potentially fall back below the 12000 level towards the significant support at approximately 11722. However this pattern in itself would be weak as it would indicate the formation of a double top but with the second peak higher than the first.

Instead it may be more likely that a continued rise in the short term to just below 13000 is seen with a moderate fall in the markets value occurring shortly afterwards. This would then allow the market to either form a third, lower peak and thus a head and shoulders pattern or, the market could build a solid support layer from which to breakthrough the 13000 level towards new highs.