Technicals

European Stocks Rebound, Bias Still Favors Downside

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 found initial support at 4968.49, the 38.2% Fibonacci retracement level, and began to rebound a bit higher. Near-term resistance is seen at 5053.10, the 23.6% Fib. Beyond that, the bulls face support-turned-resistance at the bottom of a rising channel established from mid-August, now at 5142.96.

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 found initial support at 54520, the 61.8% Fibonacci retracement level, and popped back over the 50% mark. Continued bullish momentum will aim for a test of 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 seen bearish momentum lose steam ahead of the 50% Fibonacci retracement. Initial resistance lines up at 3683.31, the 38.2% Fib level. A push higher beyond that will likely see a test above the psychologically significant 3700.00 handle.

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

Spanish shares saw selling pressure let up just ahead of the 50% Fibonacci retracement level, with the subsequent rebound on pace to re-test the 23.6% mark at 1160.15. A break higher beyond that will aim to test rising wedge support-turned-resistance, now at 1174.95.

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 found support at 22657.08, the 38.2% Fibonacci retracement level, after breaking past a rising trend line established from the swing lows in mid-August. A re-test of that trend line (now at 23070.94) may follow ahead before bearish momentum resumes.