A series of higher highs and higher lows which represented a strong up trend in the FTSE 100 reached a high just below 5400 on 16 November (5497). A consolidation period followed after this, with the price action forming a triangular pattern, lower highs and higher lows.

Price broke out of this consolidation pattern on 23 December, with price closing above a trend line connecting lower highs of the consolidation. Further potentially bullish action was seen on 29 December in the form of a gap, where the lows of that day were higher than the highs of the previous trading day, and price has closed above 5400 every day since 24 December.

However the follow through since the gap day has not to date been convincing, with two black candlesticks forming on the two days following the gap, and price yet to close above the close of the gap day, 5438.

In traditional technical analysis there are four classifications of gaps, one of them being called an exhaustion gap, the last excited jesture of the bulls or bears at the end of a trend, shortly after which the trend ends.

After an upward break of this kind, all eyes are on the bulls. Have they the staying power to follow through on the break out, will they be able to push prices well beyond the close of the gap day? Or will, with hindsight, that gap turn out to be an exhaustion gap?