Well after gold hit the psychological barrier of $1000 just yesterday, today it was the turn of the FTSE 100 to break through a major resistance level as it ended the day at 5004.3. However despite various different media outlets in the UK getting excited about this particular story, is it really that significant?

Well in my opinion although these round numbers often act as major support and resistance levels in the world of trading, I personally think 5100 is more significant. That’s because this is a very important fibonacci resistance level (50%).

I wouldn’t be at all surprised if the price continued upwards towards this 5100 level before any reversal takes place. There’s no doubt that the economy is slowly improving but to some extent this positive future outlook is already priced in.

I really can’t see the FTSE 100 breaking through the 5100 mark, unless of course the Dow Jones posts some big gains in the coming days and weeks. In which case the FTSE will be dragged upwards as well. However I think this is unlikely because we have come a long way in a very short period of time.

 

 

Filed under: Indices

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