Technicals

European Stocks Decline, Meet Initial Support

WEEKLY STRATEGY

FTSE 100 Pivot Table

DAX 30 Pivot Table

CAC 40 Pivot Table

FTSE 100

Long-term Technical Outlook

The FTSE has reached the 100% extension of the 3461-4521 rally (5156).  Parallel channel resistance at this level reinforces this level and increases the risk of a top and reversal.  5339 would be the next level of potential resistance.

Short-Term Technical Outlook

The FTSE has hit support at the bottom of a rising channel established from mid-August with negative divergence on the RSI oscillator pointing to a bearish bias. A break lower eyes the 23.6% Fibonacci retracement level at 5053.10.

DAX

Long-term Technical Outlook

The DAX has yet to reach its measured resistance point of 6113, which is where the 2 bull legs from the March low would be equal.  Potential resistance prior to that point is 5870 (50% of decline from 8152).  The mentioned 6113 is reinforced by 6168 (former support line in gray).

Short-Term Technical Outlook

The German benchmark index continues to oscillate between the triple top at 57490 and the 23.6% Fibonacci retracement level at 56356. Negative RSI divergence argues for a selloff, with a break lower to challenge the 38.2% Fib at 55654.

CAC 40

Long-term Technical Outlook

Similar to the DAX, the CAC 40 has yet to reach its measured resistance point of 6113, which is where the 2 bull legs from the March low would be equal.  However, price is close and potential parallel channel resistance reiforces the current area as one that may provide the supply required to produce a reversal.

Short-Term Technical Outlook

French issues have sold off to meet rising trend line support, with negative RSI divergence hinting at continuation of bearish momentum. A break lower will target the 3703.08 – 3724.34 price congestion region.

IBEX 35

Long-term Technical Outlook

The IBEX has reached the January 2008 low.  Former support is now resistance.  RSI divergence warns of a trend change as well.  Watch the trendline and top channel line as potential end points for the rally in the event that the advance continues.  1247 (100% extension) is also a level to expect a reversal if reached.

Short-Term Technical Outlook

A Rising Wedge with negative RSI divergence points to a bearish reversal ahead for Spanish issues. Initial support is seen at 1163.92, the wedge formation bottom, and is reinforced by resistance-turned-support in the 1152.28 – 1160.76 congestion area.

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB index encounters resistance from channel midline.  Additional levels to watch are 24916 to 26464.  The 100% extension of the 12332-20702 rally is near the top of this range.

Short-Term Technical Outlook

The FTSE/MIB looks to be on pace to forming a near-term top having shown bearish confirmation following an inverted hammer candlestick as well as clear negative RSI divergence. A reversal sees initial support at 22872.88 at a rising trend line established from mid-August.