| Index | Strat | Risk | Target |
| FTSE | Flat | ||
| DAX | Flat | ||
| CAC 40 | Flat |
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FTSE 100
The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 may be just the first wave of a 3 wave correction as the index has yet to reach the former 4th wave / Fibonacci resistance in the 4676 - 5232 zone. The important takeaway regarding all European equities is that there is risk of a top and reversal.
The FTSE looks to be reversing course having tested the top of a rising channel. Support is seen at the intersection of the channel’s bottom and the 23.6% Fibonacci retracement level (4270.63).
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DAX 30
Long-term Technical Outlook
The DAX is divergent with daily RSI at its recent top. This is especially bearish given the 5 wave decline from the 2007 high. Similar to the FTSE, the index has yet to reach Fibonacci resistance (5409-5959) so the recent rally may be just wave A of an A-B-C corrective advance. However, the rally is not clearly impulsive so this may be an important secondary top.
Short-Term Technical Outlook
German shares have broken lower having testing resistance at the top of a rising channel, taking out Initial support at the 76.4% Fibonacci retracement level. The channel bottom (now at 46977) lines up as the next hurdle for bearish momentum, with a break lower targeting the 61.8% Fib mark.
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CAC 40 _
Long-term Technical Outlook
In examining the CAC 40 pattern from the 2007 high, it is possible to count 5 waves down with wave 5 as an ending diagonal. The diagonal is clear on this chart. The index is nearing resistance from the January high. Given the recently overbought readings in the other European indexes, watch out for a reversal in the CAC 40.
Short-Term Technical Outlook
The French benchmark index has followed through on an Inverted Hammer candlestick formation, selling off to meet support at the 23.6% Fibonacci retracement level. A break beyond that will challenge the channel bottom at 310124.
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IBEX 35 _
Long-term Technical Outlook
Same story with the IBEX 35. The rally from the low (6703) is corrective. The index is divergent with daily RSI at its recent high. This is especially bearish given the 5 wave decline from the 2007 high. The index has yet to reach Fibonacci resistance (5409-5959) so the recent rally may be just wave A of an A-B-C corrective advance. However, the rally is not clearly impulsive so this may be an important secondary top.
Short-Term Technical Outlook
Spain’s benchmark index has reversed sharply lower after showing a Dark Cloud Cover candlestick formation breaking below support at the bottom of a rising channel formation. A break below support-turned-resistance at 89883 (the April swing top) opens the door for a drop to the 100-day SMA.
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S&P/MIB INDEX
Long-term Technical Outlook
It appears that the Milan index needs at least one more low prior to formation of a longer standing bottom. An impulse (5 waves) appears to be unfolding from the 2007 high. Wave 3 is complete at 12332. I wrote last week that “a wave 4 recovery could be large as initial Fibonacci resistance is not until 19543.” The index is closing in on Fibonacci resistance so beware of a top forming soon.
Short-Term Technical Outlook
The MIB Index broke below support at a rising trend line, showing a large Bearish Engulfing candlestick formation. Initial support is seen at the 23.6% Fibonacci retracement level.
