European Markets, Technicals

FTSE Near-Term Positioning Favors The Downside

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete.  The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now).  Initial support is 4955.

FTSE near-term positioning favors the downside as prices trend lower in a falling channel. Near-term resistance is seen at 5511.66, the channel top, while support is found in the 5440.22-5455.37 congestion region. A below this barrier exposes 5390.58.

The DAX is in the same position as the FTSE.  The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave.  Initial support is 5159.

German shares have trended lower since breaking below rising trend line support, with price action guided by a well-defined falling channel. Prices have come off the bottom of the formation to re-test support-turned-resistance at 59350. Renewed bearish momentum from here will target another test of the channel’s lower boundary, this time at 58452.

The CAC 40 has dropped below trendline support and a large B wave may be underway now towards 3398.  Favor the downside against the January high.

As with its German counterpart, the CAC has broken below rising trend line support and is being guided lower by a falling channel. A bounce from the channel bottom has stalled below support-turned-resistance at 3979.15, with renewed selling to target 3933.91.

After reversing in January, the IBEX has declined in impulsive fashion.  Additionally, RSI divergence on the weekly suggests that the top is important.  Favor the downside.  The next support is 993.

Madrid issues are positioned broadly in line with the DAX and CAC: prices have taken out rising trend line support and are trending lower bounded by a falling channel. Near-term support has been found at 1185.46, the 50% Fibonacci retracement level, with an upswing to aim for the 38.2% Fib at 1194.56. Alternatively, a break lower exposes the 61.8% Fib at 1176.35.

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support.  The drop below channel support indicates that the path of least resistance is lower.  The next level of support is 20702.

Italy’s benchmark index seems to be stalling behind its counterparts in Germany, France and Spain. Indeed, while those indexes have broken lower, the FTSE/MIB continues to test rising trend lie support, with the hurdle reinforced by the 23.6% Fibonacci retracement level. Nonetheless, cues from other major exchanges suggest the path of least resistance leads lower, with the next level of relevant support on a breakdown past current levels found at the 38.2% Fib (23040.84).