By Adam Ewing
Sept. 16 (Bloomberg) -- The FTSE 100 Index has broken through a Fibonacci retracement level as investors remain bullish and it looks like the market will continue to rise, according to Hobart Capital Markets.
The FTSE 100 has rebounded 46 percent since reaching this year’s low on March 3, breaching a key Fibonacci retracement level of 50 percent.
“In a normal trading environment you would expect the bulls to take a breather,” Nick Batsford, a London-based technical analyst at Hobart, told Bloomberg News today in a telephone interview. It is hard to tell when a fall will happen given the bid rumors and amount of cash waiting to enter the market, he added.
The FTSE could reach 5,200 before sliding down, but isn’t likely to break the 4,800 support level, Batsford said.
The FTSE 100 added 82.51, or 1.6 percent, to 5,124.64 as of 12:13 p.m. today in London, gaining for a fourth day.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance or below support indicates a stock may move to the next level.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Adam Ewing in Stockholm aewing5@bloomberg.net.
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