Technicals
European Stocks Correct Higher, Bias Remains Bearish
February 25, 2010 at 4:03 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The FTSE has found near-term support at 5316.79, the 50% Fibonacci retracement of the downswing from the swing high in mid-January. Near-term resistance remains at 5383.72, the 61.8% Fib reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Negative RSI divergence argues for a bearish bias. A break lower exposes the 38.2% mark at 5249.86.
DAX
Long-term Technical Outlook
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.
Short-Term Technical Outlook
German shares broke down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now stalling above the 38.2% Fibonacci retracement of that rally at 55702. Continued selling will target 55260, the 61.8% Fib level.
CAC 40
Long-term Technical Outlook
The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.
Short-Term Technical Outlook
The French benchmark index found support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month, a level reinforced by the 38.2% Fibonacci retracement level at 3697.72. A push lower will target the 50% Fib at 3668.73, while near-term resistance is found at the channel’s mid-line (now at 3757.56).
IBEX 35
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The IBEX corrected slightly higher to meet near-term resistance at 1025.14, the 23.6% Fibonacci retracement of the latest down leg. A break above this boundary exposes the 38.2% Fib at 1035.11, while near-term support is marked by the last swing low at 1009.01.
S&P/MIB
Long-term Technical Outlook
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.
Short-Term Technical Outlook
Italy’s benchmark index has retraced a bit higher after breaking out of a rising channel that had framed the upswing from the lows set earlier this month. Near term resistance stands at 21349.62, the 38.2% Fibonacci retracement of the 02/08-02/22 rally, and reinforced by the channel’s lower boundary. Near-term support lines up at 21180.81, the 50% Fib.
European Stocks to Extend Decline as Prices Clear Key Support
February 24, 2010 at 2:44 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The FTSE has put in an Evening Star candlestick formation below resistance at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January reinforced by support-turned-resistance at the bottom of a previously broken rising channel. A break below the 50% Fib at 5316.79 exposes the 38.2% mark at 5249.86.
DAX
Long-term Technical Outlook
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.
Short-Term Technical Outlook
German shares down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now working negotiating the 38.2% Fibonacci retracement of that rally at 56144. Continued selling will target 55702, the 50% Fib level.
CAC 40
Long-term Technical Outlook
The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.
Short-Term Technical Outlook
The French benchmark index has dropped toward support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month. This juncture (now at 3682.82) is reinforced by the 23.6% Fibonacci retracement of the 01/11-02/08 decline, with a break lower opening the door for considerable downside to target the 3600.00 figure.
IBEX 35
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.
S&P/MIB
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.
European Stocks Drift Lower, Further Downside Expected
February 22, 2010 at 11:04 pm by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The FTSE has put in a Shooting Star candlestick formation below resistance at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Initial signs of negative RSI divergence are also emerging, hinting that a pullback is likely to materialize in the near term. Initial support is seen at 5316.79, the 50% Fib.
DAX
Long-term Technical Outlook
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.
Short-Term Technical Outlook
German shares are stalling below 57400, the intersection of a horizontal resistance level and the top a near-term rising channel that has been guiding prices higher since the beginning of the month. Negative RSI divergence bolsters the likelihood of a bearish scenario, with a downswing to target the channel bottom (now at 56131).
CAC 40
Long-term Technical Outlook
The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.
Short-Term Technical Outlook
The French has stalled below resistance at the top of a rising channel that has been guiding the move higher since the beginning of the month, with prices testing initial support at the 38.2% Fibonacci retracement of the 01/11-02/08 decline (3753.05). This boundary is reinforced by the channel’s mid-line (now at 3733.63), with a break lower exposing the 23.6% Fib at 3673.88. Negative RSI divergence bolsters the case for a downside scenario.
IBEX 35
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The IBEX is showing a large Bearish Engulfing candlestick pattern after a failure to hold above resistance at 1071.62, the 61.8% Fibonacci retracement of the 02/03-02/05 downswing. Initial support lines up at 1056.63, the 50% Fib, with a break lower opening the door for a test a rising trend line set from the swing low set earlier this month, now at 1045.44. Negative RSI divergence bolsters the case for a downside scenario.
S&P/MIB
Long-term Technical Outlook
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.
Short-Term Technical Outlook
Italy’s benchmark index is drifting lower following a test of resistance at the top of a rising channel that has framed the upswing from the lows set earlier this month. Negative RSI divergence bolsters the case for a downside scenario. Initial support is seen in the 21386.14-21528.41 congestion region, with a break lower exposing the channel bottom (now at 21316.45).
European Stocks Vulnerable as Prices Approach Resistance
February 22, 2010 at 4:25 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The FTSE is approaching a critical upside barrier at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January, a level reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Relative strength studies area heading into overbought territory, hinting that some manner of pullback may materialize in the near term. Initial support is seen at 5316.79, the 50% Fib.
DAX
Long-term Technical Outlook
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.
Short-Term Technical Outlook
German are approaching key resistance at 57400, the top a near-term rising channel and the previous swing top from earlier this month. Negative RSI divergence suggests a move lower is likely from here, targeting the channel bottom at 56012.
CAC 40
Long-term Technical Outlook
The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.
Short-Term Technical Outlook
The French benchmark index has pushed through resistance at 3764.00, the 76.4% Fibonacci retracement of the decline from February’s swing high, but negative RSI divergence suggests below falling trend line resistance bodes ill for continued bullish momentum. Initial support lines up at 3722.33, the 61.8% Fib.
IBEX 35
Long-term Technical Outlook
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.
Short-Term Technical Outlook
The IBEX is approaching resistance at 1071.62, the 61.8% Fibonacci retracement of the down move from early February. Negative RSI divergence argues for a reversal lower at this juncture, with the initial downside barrier at the 50% Fib (1056.63).
S&P/MIB
Long-term Technical Outlook
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.
Short-Term Technical Outlook
Italian issues has overcome resistance at the 61.8% Fibonacci retracement of the down move from this month’s swing high (21724.43), but a formidable barrier lines up nearby at the top of a rising channel formation. If bullish momentum persists, the next relevant boundary lines up at 22021.84, the 76.4% Fib retracement. Alternatively, a turn lower sees initial support at the 50% Fib level (21484.05).
FTSE Near-Term Positioning Favors The Downside
February 2, 2010 at 3:41 pm by Jamie Saettele · Leave a Comment
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).
European Stock Exchanges Position to Resume Decline
January 19, 2010 at 3:00 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
The FTSE continues to work higher and has surpassed its 61.8% retracement of the decline from the 2007 high. The next level of potential resistance is the August 2008 high at 5649. A Fibonacci extension at 5811 would be the following objective. There is channel resistance at 5742 this week (increases 35 points per week).
Short-Term Technical Outlook
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.
DAX
Long-term Technical Outlook
Having held trendline support throughout the fall and winter, the DAX is nearing potential resistance from an extension (100%) at 6113. That level is where there are 2 equal legs higher from the March low. The 61.8% retracement of the decline from the 2007 high is also potential resistance. This level is reinforced by the surrounding congestion zone.
Short-Term Technical Outlook
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.
CAC 40
Long-term Technical Outlook
The CAC 40 is testing a resistance line (drawn off of highs in 2007) this week. Exceeding this line would shift focus to the 50% retracement at 4317. The rally from the March low is in 5 waves (not labeled) and is therefore the first wave in a larger multiyear correction.
Short-Term Technical Outlook
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.
IBEX 35
Long-term Technical Outlook
The IBEX looks most like the US indexes (especially the S&P) in that the index has broken higher from months of sideways trading. This in itself is bullish but there is potentially strong resistance at 1247. This is both the 61.8% of the decline from the 2007 high and the 100% extension of the first leg of the rally from the March low. Watch the underside of the former support line for resistance. The line is at 1278 this week and increases 14 points per week.
Short-Term Technical Outlook
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.
S&P/MIB
Long-term Technical Outlook
In October, the FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and subsequently fell beneath trendline support. The high has held but the decline is not impulsive. A move through 24568 would expose former support at 26464. Watch the underside of the former support line for resistance. The line is at 24979 this week and increases 294 points per week.
Short-Term Technical Outlook
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).
European Stock Exchanges Position To Correct Lower
January 11, 2010 at 4:16 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
The FTSE continues to work higher and has surpassed its 61.8% retracement of the decline from the 2007 high. The next level of potential resistance is the August 2008 high at 5649. A Fibonacci extension at 5811 would be the following objective. There is channel resistance at 5742 this week (increases 35 points per week).
Short-Term Technical Outlook
The FTSE has stalled ahead of the 5550.00 level with prices now edging below support at the bottom of a rising channel in place since late December. A move below initial support at 5507.24 exposes 5445.17.
DAX
Long-term Technical Outlook
Having held trendline support throughout the fall and winter, the DAX is nearing potential resistance from an extension (100%) at 6113. That level is where there are 2 equal legs higher from the March low. The 61.8% retracement of the decline from the 2007 high is also potential resistance. This level is reinforced by the surrounding congestion zone.
Short-Term Technical Outlook
GA minor rising channel has emerged after prices broke out of a larger bullish channel formation, with prices now testing support at 60661. A rebound lower sees support at 59741, while a breakout will expose the 61000 level.
CAC 40
Long-term Technical Outlook
The CAC 40 is testing a resistance line (drawn off of highs in 2007) this week. Exceeding this line would shift focus to the 50% retracement at 4317. The rally from the March low is in 5 waves (not labeled) and is therefore the first wave in a larger multiyear correction.
Short-Term Technical Outlook
The CAC is showing a Rising Wedge formation with negative RSI divergence, hinting that a bearish reversal is ahead. A break below the wedge bottom (now at 4026.82) exposes support at 3990.56, the 23.6% Fibonacci retracement of the most recent upswing.
IBEX 35
Long-term Technical Outlook
The IBEX looks most like the US indexes (especially the S&P) in that the index has broken higher from months of sideways trading. This in itself is bullish but there is potentially strong resistance at 1247. This is both the 61.8% of the decline from the 2007 high and the 100% extension of the first leg of the rally from the March low. Watch the underside of the former support line for resistance. The line is at 1278 this week and increases 14 points per week.
Short-Term Technical Outlook
Overall positioning shows Spanish shares are forming a Rising Wedge bearish reversal formation. Near-term resistance is seen at 1229.90, the wedge top, while support lines up in the 1203.22 – 1210.26 congestion region.
S&P/MIB
Long-term Technical Outlook
In October, the FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and subsequently fell beneath trendline support. The high has held but the decline is not impulsive. A move through 24568 would expose former support at 26464. Watch the underside of the former support line for resistance. The line is at 24979 this week and increases 294 points per week.
Short-Term Technical Outlook
Italy’s FTSE/MIB index is showing a Hanging Man candlestick ahead of the 24000.00 level, hinting that a corrective decline may be ahead. Initial support is seen at 23559.53, the 23.6% Fibonacci retracement of the latest upswing.
Most European Stocks Pause to Consolidate, DAX Breaks Lower
January 4, 2010 at 1:42 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
The FTSE remains constructive until a drop below 4955. Potential channel resistance is not until 5483 today. The structure of the rally is bearish, taking the form of a correction (3 waves). What’s more, wave c is equal to wave a in percentage terms.
Short-Term Technical Outlook
The FTSE has broken above falling trend line resistance but the bulls have met some push-back ahead of the 5450.00 level. Initial support is seen at 5386.55, the 23.6% Fibonacci retracement level, while the latest swing high at 5445.17 marks near-term resistance.
DAX
Long-term Technical Outlook
The DAX has found support from a support line extended from the March and July lows. A short term former support line may act as resistance at the current level. A continuation of the bear trend would be signaled on a drop below 5313. In the event of a new high, the 6000-6110 zone is resistance.
Short-Term Technical Outlook
German shares broken below rising trend line support set from December’s swing low. Initial support is seen at 59387, the 23.6% Fibonacci retracement level.
CAC 40
Long-term Technical Outlook
The CAC 40 reached its 100% extension at 3892 and reversed sharply, eventually falling beneath the October low. A larger turn would be signaled on a drop below 3550. Trading above the October high would shift focus to 4000 and then channel resistance.
Short-Term Technical Outlook
The French benchmark index has overcome triple top resistance near 3868.16 and prices have now taken a breather to consolidate below the swing high at 3976.92. Near-term support is seen at 3933.85, the 23.6% Fibonacci retracement level.
IBEX 35
Long-term Technical Outlook
TThe IBEX reversed at January 2008 low of 1194. Also, the index broke beneath the October low (red line) and trendline support. The rally from 1118 raises the possibility that the break was false however. Trading to a new high would expose a measured level at 1247. Under 1118 signals that the larger decline has resumed.
Short-Term Technical Outlook
Spanish shares were rejected lower from resistance at the intersection of the 1203.22-1210.26 congestion area and the upper boundary of a rising channel that has guided trading for most of December. Initial support has been found at the channel’s mid-line, now at 1193.63.
S&P/MIB
Long-term Technical Outlook
The FTSE/MIB broke beneath its support line for several days as well as its 50 day SMA. The moving average may be resistance now. The rally from March is in 3 waves and the recent reversal occurred following what appears to be completion of an ending diagonal. This is bearish evidence so I am looking for the decline to continue.
Short-Term Technical Outlook
Italy’s FTSE/MIB index looks somewhat similar to its UK counterpart: prices have taken out falling trend line resistance but the rally has paused ahead of the 23500.00 level. Initial support is seen at 23217.16, the 23.6% Fibonacci retracement level.
European Stocks Rebound But Resistance Looms Ahead
December 1, 2009 at 11:04 pm by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
The FTSE remains constructive until a drop below 4955. Potential channel resistance is not until 5483 today. The structure of the rally is bearish, taking the form of a correction (3 waves). What’s more, wave c is equal to wave a in percentage terms.
Short-Term Technical Outlook
The FTSE has rebounded above support-turned-resistance at 5299.57, with prices now on pace to test downward-sloping trend line resistance at 5352.57. A push above that will open the door for a move to November’s high near 5400.
DAX
Long-term Technical Outlook
The DAX has found support from a support line extended from the March and July lows. A short term former support line may act as resistance at the current level. A continuation of the bear trend would be signaled on a drop below 5313. In the event of a new high, the 6000-6110 zone is resistance.
Short-Term Technical Outlook
German shares have rallied through resistance in the Fibonacci zone, with prices now on pace to challenge the 58000 handle. A push beyond that will clear the way for a test of double top resistance at 58360.
CAC 40
Long-term Technical Outlook
The CAC 40 reached its 100% extension at 3892 and reversed sharply, eventually falling beneath the October low. A larger turn would be signaled on a drop below 3550. Trading above the October high would shift focus to 4000 and then channel resistance.
Short-Term Technical Outlook
Paris issues have pushed above resistance at 3769.85, the 61.8% Fibonacci retracement level. From here, prices are set to test falling trend line resistance at 3785.64, with a break above that opening the door for a move to November’s high at 3868.16.
IBEX 35
Long-term Technical Outlook
TThe IBEX reversed at January 2008 low of 1194. Also, the index broke beneath the October low (red line) and trendline support. The rally from 1118 raises the possibility that the break was false however. Trading to a new high would expose a measured level at 1247. Under 1118 signals that the larger decline has resumed.
Short-Term Technical Outlook
Spanish shares have pushed higher since gapping lower at the beginning of the trading week, with prices consolidating between the 50% and 23.6% Fibonacci retracement levels (1164.12 and 1188.48, respectively). A break higher sees near-term resistance at falling trend line resistance set from November’s swing top (1196.51), while a move lower will target 1140.
S&P/MIB
Long-term Technical Outlook
The FTSE/MIB broke beneath its support line for several days as well as its 50 day SMA. The moving average may be resistance now. The rally from March is in 3 waves and the recent reversal occurred following what appears to be completion of an ending diagonal. This is bearish evidence so I am looking for the decline to continue.
Short-Term Technical Outlook
Italy’s benchmark index has moved above resistance at the 20-period moving average and is now testing the 50% Fibonacci retracement level at 22551.20. A break higher will target 22556.05.
European Stocks Consolidate, Bias Remains Bearish
November 25, 2009 at 5:13 am by Ilya Spivak · Leave a Comment
WEEKLY STRATEGY
FTSE 100
Long-term Technical Outlook
The FTSE remains constructive until a drop below 4955. Potential channel resistance is not until 5483 today. The structure of the rally is bearish, taking the form of a correction (3 waves). What’s more, wave c is equal to wave a in percentage terms.
Short-Term Technical Outlook
The FTSE continues to consolidate near familiar levels with near-term support seen at 5299.75, the 23.6% Fibonacci retracement level. A break below that eyes the 38.2% Fib at 5239.62.
DAX
Long-term Technical Outlook
The DAX has found support from a support line extended from the March and July lows. A short term former support line may act as resistance at the current level. A continuation of the bear trend would be signaled on a drop below 5313. In the event of a new high, the 6000-6110 zone is resistance.
Short-Term Technical Outlook
As with UK shares, the DAX continues to trade sideways below 58475 with near term support at 57220, the 23.6% Fibonacci retracement level. The bias has looked bearish since prices broke lower out of a rising channel established from the monthly low at 53160.
CAC 40
Long-term Technical Outlook
The CAC 40 reached its 100% extension at 3892 and reversed sharply, eventually falling beneath the October low. A larger turn would be signaled on a drop below 3550. Trading above the October high would shift focus to 4000 and then channel resistance.
Short-Term Technical Outlook
French issues are testing resistance at 3858.36, the top of a rising channel that has guided prices since the beginning of the month. Initial support is seen at 3805.09, a horizontal resistance-turned-support level.
IBEX 35
Long-term Technical Outlook
TThe IBEX reversed at January 2008 low of 1194. Also, the index broke beneath the October low (red line) and trendline support. The rally from 1118 raises the possibility that the break was false however. Trading to a new high would expose a measured level at 1247. Under 1118 signals that the larger decline has resumed.
Short-Term Technical Outlook
Spanish shares remain caught up in the lower part of a rising channel set form the monthly low, with initial resistance seen at 1204.30, the channel’s mid-line. Clear negative divergence on the RSI oscillator carries a bearish bias, hinting that traders may see a test of channel support at 1180.35.
S&P/MIB
Long-term Technical Outlook
The FTSE/MIB broke beneath its support line for several days as well as its 50 day SMA. The moving average may be resistance now. The rally from March is in 3 waves and the recent reversal occurred following what appears to be completion of an ending diagonal. This is bearish evidence so I am looking for the decline to continue.
Short-Term Technical Outlook
The FTSE/MIB has remained under pressure since breaking out of a rising channel set from the monthly swing low. A shallow rebound is being contained by the 38.2% Fibonacci retracement level at 22979.57, with near term support at 22754.46 (the 50% Fib).
