| 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 rebounded at support marked by the bottom of a rising channel and reinforced by the 23.6% Fibonacci retracement level. Near-term resistance is seen at 3460.71, the previous swing high.
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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 broke lower out of a rising channel but prices found support at the 23.6% Fibonacci retracement level and rebounded sharply higher, racing past support-turned-resistance at the channel bottom. Continued bullish momentum will aim to challenge the previous swing high at 49850.
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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 closely resembles that of the FTSE: prices have rebounded higher at support marked by the bottom of a rising channel and the 23.6% Fibonacci retracement level. Resistance is seen at 3355.95, the previous swing high.
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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
The IBEX found support and rebounded at the 23.6% Fibonacci retracement level after breaking lower out of a rising channel. Initial resistance lines up on a re-test of the channel’s lower boundary, now at 92864.
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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
As with most top European indices, the MIB rebounded at the 23.6% Fibonacci retracement level following a break of support at a rising trend line established from the lows in March. Resistance is seen at the intersection of the trend line with the previous swing top at 21322.
