For there to be new signs of strength, to remove the risk of attending a broader and longer downward consolidation or correction, the minimum required is that the main European stock exchanges manage to surpass the highs they established two weeks ago, such as the 4,165 points of EuroStoxx 50 o go 9,310 points of Ibex 35.

There are the highs of the weekly bearish engulfing pattern displayed by the Old Continent indices in mid-June. This dual candlestick pattern occurs after an uptrend and is made up of two candles of opposite color.

The first candle continues the previous uptrend, and the second is a candle that engulfs the first. According to the oriental candle theory, the maximums of the bearish engulfing pattern become an important resistance that is usually a ceiling of the rises, which in the present case I understand that it is something temporary since I continue to insist, once again, that in the coming months we will most likely see the EuroStoxx 50 reach the zone of 4,575 points and the Ibex 35 the 10,100 points, which is where it traded before Covid-crash.

Up to these objectives there is still a margin of rise of around 10%, which will be more if the European stock markets finally choose to form a deeper correction or consolidation, which would serve to eliminate the high overbought that the EuroStoxx 50 shows in the weekly chart, which it is dangerous since it is identical to the one on the roof that marked 2015 and 2017.

This possible fall I see limited in the worst case to the range of 3,785 / 3,860 points, whose scope would provide an unbeatable opportunity to buy back the stock market with a much more attractive risk-return equation than the one currently available. For a correction to take shape, I suggest you watch the support presented by the S&P 500 in the 4,150 / 4,167 points.

As long as this support range does not fall, we could be facing a simple lateral consolidation in Europe, whose base could be in the 8,800 for the Ibex 35 and 4,020 for the EuroStoxx 50. Until then I would not buy and if it continues to rise then continue enjoying the purchases made so far.

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Análisis estratégico del S&P 500

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Strategic analysis of the S&P 500
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Análisis estratégico del EuroStoxx 50

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Strategic analysis of the EuroStoxx 50
Bounce very shy for so much fall

For readers who want more: Ecotrader, the premium investment strategy portal

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